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Economy and Banking Sector of Iceland

Financial Market Development

Financial Market Development
4.2 (max 7.0), 49th out of 138 countries
Banks' Soundness
4.9 (max 7.0), 67th out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2017-2018, financial market development in Iceland is scored 4.2 out of maximum 7.0 and ranked 49th out of 138 analysed economies, trustworthiness and confidence of financial market is scored 4.3 (66th place).

Financial Market Development in Iceland.

Chart 1. Financial Market Development in Iceland. Source: WEF.

Soundness of banks is scored 4.9 bringing Iceland into the 67th place.

Soundness of Banks in Iceland.

Chart 2. Soundness of Banks in Iceland. Source: WEF.

Further Information

Banking Focus

Banks in Iceland are mainly focused on the following areas:

  • retail banking
  • universal banking
  • asset management

Banking Supervision

Seðlabanki Íslands

Central Bank of Iceland

Banking Sector Structure

Number of Banks
Recent Changes (2017)
new banks: 0, closed banks: 0

Currently there are 9 credit institutions operating in Iceland.

Recent structural changes (2013 - 2017) of the banking sector of Iceland are summarised in Table 1.

Number of Opened Banks00100
Number of Closed Banks11400

Table 1. Recent structural changes in the banking sector of Iceland.

The list of the most recently opened banks in Iceland is provided in Table 2.

NameStart Date
Sparisjóður Austurlands hfJanuary 2015

Table 2. The most recently opened banks in Iceland.

All the credit institutions operating in Iceland can be classified into several categories. Table 3 summarises the number of banks in each category.

CategoryNumber of Banks
Central banks1
Commercial banks4
Savings banks4

Table 3. Number of banks by category in Iceland.

Deposit Guarantee Scheme

Maximum Protected Amount
1,700,000 ISK

Deposit guarantee scheme is a financial stability mechanism implemented in many countries to protect bank depositors against the loss of their deposits in the case when a bank is unable to meet its obligations to depositors by compensating certain deposits held by depositors of the bank. This compensation is paid out from the contributions which banks have made into a deposit guarantee fund.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Iceland are summarised in Table 4.

Maximum Protected Amount
1,700,000 ISK
Scheme Participants
all credit institutions operating in Iceland
branches of non-EEA banks
branches of Icelandic banks abroad
Scheme Exemptions
branches of EEA-banks (covered by their home countries)
Covered Accounts
any credit balance resulting from financial deposits or transfers in normal banking transactions
Paid In Currency

Table 4. Deposit guarantee scheme in Iceland.

EEA stands for European Economic Area and consists of all EU member states plus Liechtenstein, Norway and Iceland.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Icelandic króna)
A1 (upper medium grade)
Foreign Currency
A3 (upper medium grade)

Local currency (Icelandic króna) deposit ceiling for Iceland is set to A1 (upper medium grade), foreign currency deposit ceiling is A3 (upper medium grade).