29 December 2010

Banking system: balance sheet summaries 2008-2010

The Central Bank has published balance sheet summaries for the Icelandic banking system for the period from October 2008 through November 2010. The initial balance sheets for Iceland’s three new banks – Arion Bank, Íslandsbanki, and NBI – were complete by year-end 2009, whereupon regular compilation and processing of data from the new banks began once again. Over the past several months, both the banks and the Central Bank have invested considerable work in back processing of older data. The data published now, however, are preliminary and are based on information currently available from the banks and savings banks. Because of the great uncertainty about the asset values in the wake of the financial crisis, data may change as more reliable valuations are made.

The loans of the three new banks are assessed at purchase value; that is, the price at which these parties purchased the loan portfolios from Kaupthing Bank hf., Glitnir Bank hf., and Landsbanki Íslands hf. The purchase value is the amount that is expected to be collected on the loans. The value of the loan portfolio therefore does not reflect customers’ debt position. The banks’ loan portfolios are revalued on a quarterly basis, and such revaluation could lead to an increase or decrease in the value of specific loans. Quarter-on-quarter changes in loan portfolios can therefore stem from a revaluation of loan values or from normal movement of funds, such as new lending, repayment, or changes not directly related to the banks’ collapse or its aftermath.

Because the valuation of the new banks’ loan portfolios is an important aspect of their overall portfolios, efforts are being made to co-ordinate the banks’ reports to the Central Bank of Iceland concerning provisions and changes in loan values. Nevertheless, the Central Bank is of the opinion that the data now published give a reasonably accurate overview of the banking system’s assets and liabilities, although underlying data should be interpreted with caution, as the co-ordination of data presentation is not yet complete and figures may not be comparable. The Central Bank is also compiling data on the nominal value of banking system lending from October 2008 to date, so as to provide information on customers’ debt position. The Bank hopes to publish these data in the near future.

The balance sheet summaries can be found on the Statistics pages of the Central Bank of Iceland website: www.sedlabanki.is. The data represent only the Central Bank and the deposit money banks in operation during the period in question.

For further information please contact Hrönn Helgadóttir, tel: +354 569 9600.

See: Monetary statistics

No. 37/2010
29 December 2010 
 

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