WUNRN
By Sarah O'Connor in Reykjavik
October 14, 2008
Iceland has turned to two women to rebuild its financial system after the banking empire built by its young, male business-schooled elite collapsed.
Elín Sigfúsdóttir and Birna Einarsdóttir are set to become chief executives of New Landsbanki and New Glitnir respectively, the nationalised banks created by the Icelandic government in the wake of the crisis.
One government minister said their appointments were an attempt to signal a new culture within the banking system.
Landsbanki, Glitnir and Kaupthing - infamous for their aggressive international expansion - collapsed last week under the weight of their debt, leaving the Icelandic economy on the brink of bankruptcy.
Recriminations have been flying in Iceland over who is to blame, with the British government a popular target.
But many have also criticised the young and predominantly male bankers whose "eyes became bigger than their stomachs", as one banker conceded.
"Now the women are taking over," said one government official. "It's typical, the men make the mess and the women come in to clean it up."
The government created New Landsbanki last week and put Ms Sigfúsdóttir in place. New Glitnir was being formed yesterday, with Ms Einarsdóttir widely expected to take the top job.
The banks' new chief executives were both promoted from within the ranks of the failed banks: Ms Sigfúsdóttir has been head of corporate banking at Landsbanki since 2003 and Ms Einarsdóttir became head of domestic commercial banking at Glitnir last summer. The women are expected to curb the bonus-driven risk-taking culture that has taken hold in Iceland over the past five years.
The nationalised banks will focus solely on domestic operations, keeping money flowing around Iceland's hobbled economy. A New Kaupthing is also planned.
Their first task is to begin trading the Icelandic krona, an activity that all but ceased last week, leaving most Icelandic groups unable to pay suppliers.
The three failed banks' foreign assets are being sold off but there is little idea how much money will be raised as they face firesale prices.
When asked if the new banks would return to foreign expansion, Geir Haarde, Iceland's prime minister, said: "It's too early to tell, but not in the same big way as before."
Copyright The Financial Times Limited 2008
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