IFLR 1000
The Guide to the World's Leading Financial Law Firms

CONTEXT AND TRENDS
Iceland's bank collapse is unsurprisingly still the major talking point within the legal market. "Banks continue to struggle to get away from the past," says a partner....

CONTEXT AND TRENDS

Iceland's bank collapse is unsurprisingly still the major talking point within the legal market. "Banks continue to struggle to get away from the past," says a partner.

With bankruptcies come litigation claims. "There've been a few court cases last year and this year," admits one partner. "They have been given very narrow guidelines as to what can be done and what cannot be done."

If there is still banking work to be seen, then these are simply restructurings, reorganising and refinancing of old loans. "On the corporate banking side they have been also heavily involved in restructuring old loans hopefully that's still going on which will lead to new lending, to new companies," says a partner. With a high number of insolvencies still going on, it is not surprising that banks are becoming cautious as they have to write off their loans.

There have also been cases of new banks being established after old banks collapse. For example, Landsbanki is currently a defunct bank rebranded into Íslandsbanki and it's simply awaiting for the dissolution of remaining assets. "But it's not all gloom, I mean, the banks are making profits at the same time. I think they get assets from old banks. There were some losses already accounted for," says a partner.

Corporates are not encouraged: "So companies are not really venturing into any new opportunities. They sort of maintain the position, so I guess the banks are both cautious but there are not willing lenders out there, at the same time, the ones who want to get the loans from the bank are the ones who the banks are not willing to lend to," says another partner.

The lending environment and the complete lack of outside investment has drastically reduced activity in M&A, capital markets and projects and firms report little work here except that arising from the banking collapse.

The elections coming next year, some hope, will help lead to a clean slate and help the country recover, but this optimism is not shared across the market.