Iceland saw all three of its major commercial banks collapse in October 2008 during the global financial crisis.
The banks were Glitnir, Landsbanki, and Kaupthing, and together they had expanded rapidly in the years before the crash. Their liabilities grew to many times Iceland’s annual economic output, leaving them vulnerable when international credit markets froze after the failure of Lehman Brothers in September 2008.
Glitnir was placed into receivership on 29 September 2008, followed by Landsbanki on 7 October and Kaupthing on 9 October. Iceland’s financial supervisory authorities took control of the banks, while the government introduced emergency measures to protect domestic deposits and stabilize essential banking services.
The episode is often confused with Ireland’s banking crisis, which also involved oversized banks and a property collapse. Iceland’s crisis was distinctive because its three biggest banks failed within a few days, making it one of the most dramatic national banking collapses of the 2008 crisis.