REYKJAVIK (Reuters) - Iceland's new center-right government has confirmed it plans to sell the state's minority stake in Arion Bank, the domestic arm of the failed Kaupthing Bank, in an initial public offering of shares.
The Finance Ministry said in a statement dated Feb. 10 accompanying a draft revised state ownership policy for banks that it aims to sell the government's 13 percent stake in Arion as well as fully-owned Islandsbanki, the domestic arm of failed bank Glitnir, when conditions are favorable.
Kaupthing, now a holding company that owns 87 percent of Arion Bank, has been working on plans for a stock market listing of Arion which could take place as early as April, people close to the matter have told Reuters.
To promote the stability of the financial system, the government aims to keep a 34-40 percent stake long-term in Landsbankinn, the domestic arm of Landsbanki in which it currently owns 98.2 percent, the Finance Ministry said.
Iceland's main banks Kaupthing, Glitnir and Landsbanki collapsed and went into administration in the 2008 financial crisis.
The domestic operations of Kaupthing, once a major international bank, were separated in 2009 into Arion Bank, which has insurance, asset management and retail banking assets.
Sources close to the matter told Reuters in January that Kaupthing had mandated Swedish investment bank Carnegie to act as global coordinator for an IPO of Arion together with Citi and Morgan Stanley.
The plans are seen as a sign that Kaupthing believes there is renewed investor appetite for Icelandic assets eight years after the country's financial collapse, which forced it to take a $2.1 billion IMF loan in late 2008 and another $2.5 billion from its Scandinavian neighbors.
An IPO, most likely a dual listing in Stockholm and Reykjavik, could value Arion Bank at about 1.5 billion euros ($1.59 billion), sources told Reuters in December.
Iceland's coalition government was formed in January following general elections in October.
The country is preparing to lift remaining capital controls introduced as the banks collapsed and the wider economy crashed.
Reporting by Ragnhildur Sigurdardottir, additional reporting by Rebecka Roos in Stockholm, writing by Anna Ringstrom; Editing by Adrian Croft