IFLR 1000
The Guide to the World's Leading Financial Law Firms

Iceland, despite and indeed perhaps because of its diminutive stature, has suffered just as much as any other country from the global economic crisis. After the bank collapses of 2008, it was hoped every year by those active within the market that things would pick up, and last year was no different....

Iceland, despite and indeed perhaps because of its diminutive stature, has suffered just as much as any other country from the global economic crisis. After the bank collapses of 2008, it was hoped every year by those active within the market that things would pick up, and last year was no different.

Unfortunately, any chinks of light that might signal the end of the tunnel are still fairly weak, with finance unsurprisingly hard to come by. "The banks haven't really got started with lending. They are in the process of preparing for it," says one partner, while work for firms, while plentiful, is still of a distressed nature.

"The work has come from the economic collapse. This work is ongoing and rigorous, and we have been dealing with a lot of bankruptcies and restructurings," says one partner on his deal flow, while the corporate side is not exactly thriving either: "In general, M&A work is still of a distressed nature. For instance, preparing companies to be sold on behalf of the banks. It's been mainly to Icelandic buyers too."

"There is no real corporate work to speak of, no M&A. Just restructuring," adds a corporate practitioner, while another confirms this prevailing trend: "Corporate and M&A is limited, but there is some. It is mostly disposal of assets, banks selling to others though."

A significant opinion that has emerged among people in the market is that some believe that the government is actually stifling the economy's recovery, rather than aiding it.

"They are restricting the recovery of the market. They have to explore other methods. For me the trouble wasn't with the regulations as they were in line with the rest of the EU," comments one partner, while another agrees: "It is my personal opinion that the government has an over-emphasis on themselves steering the market and economy. The government should be looking at other methods too."

"Government now is a bit obstructive to business. Business is not being allowed to go on," adds another frustrated partner.

While it is understandable that the Icelandic government would like to get hold of the market and so try to prevent what befell them before, it is a potentially worry for investors that those within Iceland are not optimistic. "It could be a long way back," remarks a partner.

Levels of investment reflect this relatively pessimistic attitude too. "There have not been many new projects and no new foreign investments," says a lawyer, while another agrees with this summation: "No, there hasn't been too much investment at all, though we hope it is going to turn around by the end of the year."

Those of a more optimistic disposition are trying to find the diamonds among the rough though, mainly looking toward investors looking for cheap deals. "There has been some new work, with a number of foreign players looking to get involved. It is a difficult environment but prices are good," says one.

Others see far more change, and are hoping this year could be one where more positive moves are made. "The market is gradually gaining strength, and is becoming more and more interesting as an option."