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🇮🇸 Iceland /Economy & Trade

Banks demanded to reverse interest rate hikes

From Morgunblaðið · () Icelandic

Translated from Icelandic, summarized and contextualized by DistantNews.

At a glance

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  • Icelandic trade unions are demanding that commercial banks retract recent interest rate hikes, citing the banks' significant profits.
  • Unions argue that banks, which reported nearly 100 billion Icelandic krónur in after-tax profits last year, should share the burden of the economic situation.
  • They highlight that while banks profit, households are struggling, with four out of ten working parents finding it difficult to make ends meet.

Icelandic trade unions have strongly condemned the recent interest rate increases announced by commercial banks, demanding that these hikes be reversed. In a joint statement, unions including VR, the Federation of Icelandic Commerce Workers, and Fagfélögin, assert that the banks, which collectively posted profits close to 100 billion Icelandic krónur after taxes last year, must now shoulder a portion of the economic burden.

There is room and there lies the social responsibility of the banks.

— Trade UnionsReferring to the banks' profits and their ability to absorb economic burdens.

The unions argue that the substantial profits generated by the banks, equating to over 320,000 krónur per adult citizen, indicate a clear capacity and a societal responsibility to mitigate the current economic pressures. They emphasize that while the banks are experiencing increased profitability and widening interest rate margins, Icelandic households are facing increasing financial strain.

The banks are profiting from the situation, but at the same time, households in the country are being squeezed even further.

— Trade UnionsDescribing the disparity between bank profits and household financial struggles.

According to the statement, the situation has become so severe that four out of every ten parents in the workforce struggle to cover their basic expenses and cannot afford unexpected costs of 100,000 krónur. This means that a broken washing machine, for example, could push a working family into financial difficulty for the remainder of the month and potentially beyond.

In other words, fully employed people are in a situation where if the washing machine breaks, they will not make ends meet at the end of the month and perhaps not the next one either.

— Trade UnionsIllustrating the precarious financial state of many Icelandic households.

The unions also referenced a commitment made by the business sector, including the banks, during recent wage negotiations. At that time, it was pledged that everyone would be in the same boat when it came to fighting inflation. The unions are now calling on the banks' management to demonstrate public accountability and solidarity with wage earners by retracting the recent interest rate increases, ensuring that the wage agreements hold.

We demand that the interest rate hikes of recent days be withdrawn, with the aim that wage agreements hold.

— Trade UnionsStating their primary demand regarding the recent bank actions.
DistantNews Editorial

Originally published by Morgunblaðið in Icelandic. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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