The madness of Glitnir

According to DV newspaper; Glitnir hired Lárus Welding (now Lárus Snorrason a Harvard student) is its bank manager. His first job was to increase lending dramatically. The staff in the loan department got good bonuses for lending money to companies and could increase their own wages accordingly.

DV reports that the corporate department of Glitnir was most affected by this change and the will to risk was increased dramatically. Irresponsible loans is one of the main reasons the bank crashed. That along side the systematic drainage of the cash just like Kaupthing did, and loans to owners and friends without any reliable collateral’s.

In 2007 Glitnir corporate division had over 200 people working there, and they had the permission to loan large amounts without asking their superiors for permission. Ten percent of the bank fee went to the staff, and one staff member could lend 200 million ISK and would receive 500-700 thousand ISK for that deal alone.

This sounds like madness to the general public, but stories I have heard from within Glitnir are just as incredible. For example in the mornings from early 2008 the staff in certain departments where shown pep speeches from famous Hollywood films like Any Given Sunday, Independence Day and other films to motivate them to get money into the bank since all the credit lines abroad had been shut down.

This meant that promoting the bank and selling it aggressively to the public and to companies was the priority of the bank, even when they knew in early 2008 that the bank was done for. DV could add that to their reports as well.

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