I've been following the latest coverage of the so-called "Icelandic financial miracle" and Icelandic investments abroad with considerable interest. The XL Leisure debacle has resulted in a further flurry of articles, not least because one of the major potential creditors was Landsbanki, which could apparently have been faced with a nasty €207m write-off. However, according to reports it seems that this potentially awkward situation has been smoothed out thanks to some re-allocating of debt between related companies, and the personal generosity and extremely deep pockets of billionaire Thor Bjorgolfsson, who stepped in to pick up the tab for this little local difficulty. An unusual situation, to say the least.
It's ironic, because just a few weeks ago the head of Iceland's Central Bank said the country's commercial banks would play an important part in maintaining confidence in Iceland's financial system in the wake of the credit crunch, warning that "under the current global financial market conditions, they [the banks] must protect their liquidity and their capital position, seek all possible ways to reduce their need for foreign credit, and adapt the scope of their operations to dramatically changed circumstances".
The circumstances are even more dramatic now, and Iceland's savings accounts and high-profile UK investments in fashion and football are under scrutiny. And of course here in print we have an Icelandic investment of our own in the shape of Wyndeham Group. Bought by a Dagsbrún investment vehicle in spring 2006 for £80.6m, eyebrows were raised (well mine were, anyway) when just a few months later the new owners were lamenting the difficulties of the printing industry. As this would only have been news if one had just been beamed in from another planet, I hope they didn't pay very much for due diligence. I've been expecting them to sell up ever since, and the rumour mill is currently in overdrive about a possible Polestar deal (how that would make sense I'm not sure, perhaps it's a topic for another day). But as the abortive HHBV/Roto Smeets acquisition shows, it's about as easy to get a deal off the ground nowadays as it is to get a cheap flight home from Tenerife at short notice.
