Home / Uncategorized / Iceland: the banks blot or gift?

Iceland: the banks blot or gift?

My last blog about Iceland for the moment, but a worthy one.

In Reykjavik, a city of 120,000 people (200,000 in the Greater Reykjavik region).  By comparison, this is the size of Watford, the UK’s 59th largest town, or Dudley (26th) if you use the larger figure.

On the harbour front in Reykjavik, they have this phenomenal new concert hall, the Harpa, which opened for business in May this year and had its grand opening in August. 


It’s name is a mix of Harp, a musical instrument in English, and the Norse name for a month in the old Nordic calendar that marks the beginning of summer. 

It’s lovely, and cost ISK27 billion (£140 million/$200 million) or more to build.

That’s a lot of money to have thrown into a project when the country can't afford it, but hey, it’s needed isn’t it?

Apparently not.

The building was originally commissioned to be the new headquarters for Landsbanki, before the financial crisis hit.  According to my local contacts, this was being funded out of the pockets of the banks leadership – a father-son team of Björgólfur Guðmundsson and his son Björgólfur Thór Björgólfsson who took the bank over when it was privatised a few years earlier.

They commissioned this as a stunning example of Iceland’s financial leadership.

It then moved to be a gift to the city as a concert hall.

Then the crisis hit, and it became the city’s white elephant.

A little like the Millennium Dome in London, everyone resented the fact that this was all being funded privately and was now suddenly going to land on the taxpayers’ pocket.

The question the government was then asked was whether to dump the development or complete it.

A difficult question, as the Harpa was half built and would leave a major wound in the landscape of the city if it was now torn down.

On the other hand, as a bank commissioned and owned enterprise that was now defunct, if it was built, it would be a continual reminder of the crisis and the failed institutions.

The government took the tough decision to complete the development, even though it was going to cost millions more, and it was finally opened to mixed emotions amongst Icelanders.

Take this from the Iceland Weather Report:

This evening will see the official opening of Harpa, Iceland’s new concert hall. The story of Harpa is the stuff of legend – somewhere during the boom years its construction was usurped by one Björgólfur Guðmundsson, former owner and Chairman of the Board of Landsbanki [also former owner of West Ham FC], who planned to present it to the Icelandic nation as a gift. Of course it followed that the original plans were scrapped and Harpa was made far more grandiose than it was ever supposed to be. For example, the gift contained a provision that it would have a special room in which the elite could hob-nob at concerts, free from the prying eyes of the lowly commoners.

And then came the bank collapse and it turned out that Björgólfur didn’t actually have any real money and he went bankrupt and here was Harpa only half-built. For a while, nobody knew what to do with it. It just sat there down by the waterfront, probably the biggest eyesore in Icelandic history, until the government decided that it would be more costly to let it disintegrate before our eyes than to pony up the billions needed to finish it.

And so, it was finished, and the official opening is tonight. Mind you, about 40% of its financing is money that had to be written off by foreign creditors who were silly enough to lend money to Landsbanki and Björgólfur Sr. Also, remember Icesave? Yup, those deposits were funnelled through to Landsbanki, and probably make up a substantial part of the foundation of Harpa today.

But we don’t like to talk about that.

No we don’t, and neither does the designer of the Harpa, world renowned artist Ólafur Elíasson, who was responsible for its outside appearance.

In an interview with the Icelandic journal, the Grapevine, Ólafur makes some positive contribution to this disaster:

The devaluation of the currency was sad and horrible, but one of the positive side effects, if such events can be viewed in a positive light, was that a lot of local subcontractors were hired. Things like the EXIT signs, which normally would have been ordered from some factory in Poland, were being made by small companies in places like Hafnarfjörður. This was nice. I am not trying to spin a positive story, but it’s worth mentioning that in light of the situation, these small local companies that employ excellent craftsmen began working on the project. 

Anyway, the final result is a concert venue that is meant to rival the Sydney Opera House, and it is quite some sight.

As you drive past the outside, light changes continually across the windows that look like marble mirrors.  This is Ólafur’s design and it uses multi-faceted glass facades that create kaleidoscopic reflections of the city and the striking surrounding landscape.

There are more than 10,000 glass windows that catch the sunlight and act like a prism, creating colourful blocks of light on Harpa’s floor and walls.


The interior is intentionally spare, suggesting to visitors that they look out at the surrounding sea, mountains, and city—an especially pleasant activity from the multi-tiered bar descending along the south façade.


Inside, the Harpa has four concert halls inspired by the elements fire, air, water, and earth, which are called, respectively, Eldborg (Fire Castle), Norðurljós (Northern Lights), Silfurberg (Iceland spar, a rare translucent calcite crystal), and Kaldalón (Cold Lagoon).

Eldborg is the grand concert hall, and it seats 1,800 people. 


It also houses a conference centre with state of the art equipment and spacious exhibition and reception areas, with conference facilities that seat up to 1,600.

A few final key facts:

Construction: commenced on January 12, 2007. During construction, 200,000 square metres of earth was cleared out and 6 million tonnes of ocean water were pumped from the building site. 

Size: 28.000 square metres 

Height: 43 metres

Materials used: 30.000 cubic metres concrete; 100 tonnes of glass

Cost: 27 billion ISK (includes cost of financing over the next 35 years loans while the loans are paid off)

Pictures from The Guardian


About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, TheFinanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

Check Also

Financial literacy is the scourge of our times

One of the issues I have with financial services is that it’s frightening. You might …