Banks/Banking in Iceland

The Central Bank of Iceland is the reserve bank that is serving since 1961. The central bank of Iceland is nominally independent, but is expected to adhere to the rules and regulations of the central government. Floating exchange rates in 2001 was introduced and from then onwards the central bank is empowered to adopt inflation targets as well as manage monetary policy to accomplish price stability.

Major Banks

The top banks in Iceland are Glitnir that is a part of Islandsbanki group and is financing loans to individuals and businesses. Islandsbanki is also one of the significant banks in Iceland that is a leading financial provider to households and institutional investors. Kaupthing Bank offers integrated financial services to individuals, companies and institutional investors.

The financial services offered include investment banking, corporate banking, asset management, capital markets service and comprehensive wealth management.

Landsbanki Islands is the National bank, Sparisjodur Bolungarvikur is the savings bank, Sparisjodur Reykjavikur og Nagrennis is the Reykjavik savings bank and Sparisjodur Vestmannaeyja is the savings bank functioning in Selfoss and the Westman Islands.

Main Operations

The banks in Iceland is done in three divisions namely, retail banking, financial operations and corporate banking. The resource divisions are risk management, operations, economic research and communications, human resources, legal and internal audit. Iceland is a mixed economy having free trade as well as government intervention to high levels, but the government consumption is relatively lesser than other Nordic countries.

Banking in Iceland is done through Landsbankinn, a leading financial institution. This bank in Iceland offers an extensive range of services and has a wide branch network, besides being the market leader in this financial service sector.

Landsbankinn focuses the domestic market for commercial banking for both, corporates and individuals. The main banking in Iceland is done with an aim to satisfy the customers and to promote more banking.

Icelandic banking played a vital role during financial crisis such that the banks grew in overseas aggressively by following financial deregulation and by acquiring assets. The top commercial banks, Kaupping Bank, Glitnir and Landsbanki in 2008 last quarter went into administration.

The Iceland economy is small and is subjected to high volatility, despite the decline in employment and GDP in 2007 to 2010, the decline of this magnitude has to be determined.