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“It Was Wrong” to Lend to United Silicon, Says Bank CEO

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“It Was Wrong” to Lend to United Silicon, Says Bank CEO

United Silicon, Helguvík.

Photo: Screenshot from RÚV.

Höskuldur H. Ólafsson, CEO of Arionbanki bank, stated it is not out of the question for United Silicon to declare bankruptcy at the beginning of next month, RÚV reports. The bank has already written off ISK 4.8 billion (USD 46.3 million/EUR 39.4 million) for the company. “This is a big loss so on that basis we can say it was wrong to lend to this project,” Höskuldur stated.

Arionbanki lent United Silicon over ISK 8 billion (USD 77.2 million/EUR 65.6 million). The bank has since settled the loan in the form of share capital and now owns two thirds of the company, which is in moratorium. The bank’s negative performance in the last quarter is largely accounted for by United Silicon. The bank is currently responsible for covering the plant’s payroll, electricity, and other costs.

United Silicon’s plant in Helguvík, Southwest Iceland has received significant media coverage since late last year, when residents of the area started to seek medical attention for respiratory tract issues. In April, the plant was briefly shut down, and its reopening in late May was met with considerable opposition. Although the plant is not currently in operation, around 65 percent of its employees are on payroll.

Höskuldur states that the bank’s loans are divided equally between individuals and businesses, so United Silicon’s situation is not a big risk. “[The bank] can handle shocks, has handled shocks before, and is set up in such a way that it can handle shocks in the future.”

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