Icesave Anniversary

Kinross + Render launched Icesave in October 2006 on behalf of Landsbanki.  It was a runaway success and the launch won us a Financial Services Forum’s PR award.

This day one year ago was a different story.  Our phones and e-mail were in overdrive as media and worried account holders sought information.  The Icelandic Financial Supervisory Authority had taken control of Landsbanki on the day before, and this blow became fatal when The UK Chancellor of the Exchequer, Alistair Darling, announced that he was taking steps to freeze the assets of Landsbanki using, in a move that still looks outrageous, anti-terrorism legislation.

In the weeks and months beforehand we were riding a roller coaster.   First, ‘briefings’ to media by external bodies suggested wrongly that Icesave account holders would not be covered by the compensation scheme – and these briefings were undoubtedly designed to undermine Icesave as they began long before its future looked in doubt.  Then, of course, banks began to tumble and Icesave’s popularity meant it was right in the firing line.  The photographs of Iceland’s beautiful geography, so useful in the launch, became iconic images for a global banking meltdown and meant, inevitably, Icesave featured strongly in copy as the next ‘possible’ victim.

Icesave’s team in London were caught between the different needs and cultures of London and Reykjavik.  They were also fighting (actually very successfully) run after run caused by public panic every time negative reports hit the front pages.  The Icesave management’s biggest concern was, and remained throughout the crisis, the welfare of their customers.

Although the team had been in crisis mode from the point other banks started to wobble, we thought Icesave would survive.  The numbers we were dealing with showed a successful set of products, great customer loyalty and all of the information on Landsbanki’s financial situation looked robust.  There was no direct exposure to the sub prime markets that had been the downfall of others and Landsbanki was solvent and had just posted good half year financial results.  But of course life is more complicated than that.  Probably the best assessment I have seen so far of the reasons for it can be found in the Buiter and Sibert report available here.  Banks from other small countries with a large, internationally exposed banking sector and its own currency should take heed.

What did we all learn?  Well the twists and turns and our responses to them followed best practice and were pretty text book.  We helped halt the runs, we stuck to known facts, were open and honest and the London management team didn’t hide.  I suppose all we learnt was that you should never under-estimate the drastic measures people will take when facing new situations, different national cultures can make a bad situation impossible, and that some disasters are un-stoppable.

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Tags: anniversary, Banking, crisis, financial pr, icesave, pr

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