The Internationalisation of Iceland's Financial Sector
Professor Richard Portes presents report for the Icelandic Chamber of Commerce
Professor Richard Portes recently presented the findings of a report he jointly wrote for the Icelandic Chamber of Commerce.
The launch of the report on the Internationalisation of Iceland's Financial Sector took place at a luncheon in London on 21st November for 200 guests, including Icelandic Prime Minister Geir H. Haarde.
The report analyses the extent of economic imbalances in Iceland and the potential effect on the financial system, as well as the development of Iceland's financial sector since the ‘mini-crisis' of early 2006.
Summing up the report, Professor Portes said, "The Icelandic banks have exploited strong competitive advantages to expand at a remarkable rate over the past five years, most of this in northern Europe, including the UK. They are highly resilient, as shown in their response to the shock of early 2006 and their stability in the current financial turmoil. The current risk premium on Icelandic banks is excessive relative to their risk exposure and in comparison with their Nordic peers. If this is a country risk premium, it is not justified by Iceland's economic situation. The internationalisation of the Icelandic financial sector is an exceptional success story that the markets should better acknowledge."
Richard Portes is a Professor of Economics at London Business School and President of the Centre for Economic Policy Research.