Icelandic banks have been ordered to start selling foreign-owned assets to help the country avoid bankruptcy. The move may have repercussions for some of the best-known names on the UK high street, including Karen Millen, House of Fraser, Debenhams and Woolworths.
The order has come from Icelandic Prime Minister Geir Haarde (pictured) who yesterday (October 6) warned that the economic situation had worsened. Addressing the nation, he said: “There is a very real danger… that the Icelandic economy in the worst case could be sucked with the banks into the whirlpool and the result could be national bankruptcy.”
Shares in Icelandic banks and investment companies, major backers of some of Britain’s biggest retailers and entrepreneurs, were suspended on the Reykavik stock market.
Landsbanki, which markets the Icesave savings brand in the UK, and Kaupthing have been told to start selling some of their overseas businesses and investments.
Also affected could be West Ham United FC, restaurateur Gordon Ramsay and supermarket and pubs investor Robert Tchneguiz, who have relied on loans from Icelandic banks to fund expansion.
Investment group Baugur, baed in Iceland, owns outright or has stakes in a number of UK high street companies, including Woolworths, Debenhams, frozen food retailer Iceland and Whistles.
The company says it is not exposed to Iceland’s faltering economy and that much of its funding comes from British banks. However, trade credit insurance company Euler Hermes yesterday told some of its suppliers that it was withdrawing their cover, a move expected to push up the costs of supplying Baugur.