Thor Björgólfur: Riches, Ruin and the Price of Respect

[00:00:09] Morning folks and welcome to today's episode. It's called Thor Björgólfur, Riches, Ruin and the Price of Respect. And for the rest of this episode I'm just going to refer to him as Þór because firstly I can't pronounce his surname and secondly I mean it's Þór you know and he actually kind of looks like Þór. And his story, it is a fascinating one because it gives us a great insight into Iceland's

[00:00:39] massive banking collapse in 2008. But there are also so many other great stories in Þór's own business career, like the 10 years he spent building his first business in Russia. Some very very big question marks about Þór's dealings while he was there. How he sold his Russian brewery to Heineken and made a hundred million dollars and then went back to Iceland to rehabilitate his family name. He became Iceland's first billionaire.

[00:01:09] Thor, but then how it all came crashing down and how he became a pariah in his own country. It is a fascinating story. Enjoy. Thor was born in Reykjavík in 1967 and he was born into a very prominent family because on his mother's side, his great grandfather, he went bankrupt twice, he came back both times and he went on to build a huge fishing and shipping business.

[00:01:36] And one of his uncles actually served as prime minister in Iceland. Now Thor's father, on the other hand, he came from a much more modest working class background. But by 1977, he'd worked his way up to become CEO of Iceland's second largest shipping company. Thor himself, very confident young fella, entrepreneurial from a very young age. For example, while at high school, he organised the first Oktoberfest beer festival in Iceland.

[00:02:07] But then in 1985, the shipping company that his father ran went bust. And the fallout, it caused this really big national scandal. And it ultimately resulted in his father being found guilty on five counts of minor bookkeeping offences. And he got a suspended prison sentence. And this had a huge impact on Þór.

[00:02:32] He's admitted himself that much of what drove him over the years that followed, it was driven by this determination to restore his family's good name. And he would tell Forbes, this is a quote from him, Þór, Þr is the number one thing that occupies my mind. Power, money, that's just the road to respect. So Þóir left Iceland to study finance at New York University. He loved New York. He loved the US. I always wanted to work there.

[00:03:01] I remember seeing an interview with him where he said he'd rather be a small fish in a big pond than a big fish in a small pond. and everyday entrepreneur while in New York, while studying, he organized nightclub events and his plan was to stay in America and get a job on Wall Street. But when he graduated in 1991, the US had just come through a recession, banks were cutting jobs, so there weren't many opportunities. So he had to return to Iceland and started working for his father,

[00:03:28] who by this stage was running a soft drinks company. The company had some bottling equipment it no longer needed, so his father sold it to an Icelandic businessman who was setting up a new drinks operation in St. Petersburg in Russia and this guy agreed to hire Thor as marketing director, so Thor moved to St. Petersburg. Now he obviously impressed the owners because within a year Thor had taken over as managing director and he decided to pivot from soft drinks to Alcopops

[00:03:57] because they were taking off big time in other markets like the UK and that turned out to be a very good decision because they were very successful but because the company was kept private, I don't have any sales figures. But what's really interesting about this stage in Thor's life is that this business, this Alcopops business, it's been clouded in a huge, huge dollop of scandal and shadiness

[00:04:22] because in 1995 Thor and his father took control of the company claiming they'd bought a majority of the business from the original owners for just $500,000 despite the business being valued at somewhere around $15 million. Now the original owners accused Thor and his father of falsifying the documents. It became a very messy legal dispute with armed guards preventing the original owners

[00:04:52] from even entering the premises. Now I really dug into this to find out exactly what had happened. It was a very complicated and confusing case but basically the number of it is that while the courts didn't establish that the signatures had been forged they did rule that the agreements used to transfer ownership were invalid. But when the original owners were eventually able to gain entry to the factory it was empty.

[00:05:20] Thor and his father had moved the business and its equipment to a different location so the original owners never recovered the business. And I know I've often spoken about youthful indiscretions and how we all do some stupid things when we're young but this is a different kind of thing altogether and Thor wasn't young. I mean Thor was what 27, 28 by this stage and the case it has followed Thor around like a bad smell ever since and I think rightly so.

[00:05:49] It all sounds so shady and it was exactly the type of thing you could get away with in Russia in the 90s and early 2000s because Russia backed in and I don't know if much has changed but it was a pretty lawless and wild west place to be doing business. For example 79 bankers and more than 150 businessmen were assassinated between 1994 and 1997 while the Guardian described the brewing industry in St. Petersburg where Thor was operating and he was about to set up a brewery

[00:06:19] as we'll find out now in a minute but this brewing industry in St. Petersburg was mafia infested and I listened to a podcast where Thor compared working in Russia to walking by a river filled with crocodiles so you had to be very careful don't be flashy don't attract much attention and according to Thor there were times where men in leather jackets would turn up at his office unannounced demanding a cut of the business or some sort of partnership

[00:06:48] and Thor also mentioned that he had some very good friends who helped him navigate through these situations so it definitely makes you wonder who these friends were because to survive in business in Russia back then I'm guessing you needed to form some let's call them unlikely alliances but this also gives us a very good insight into Thor's makeup in other words the type of risk the type of danger

[00:07:17] that he was willing to put up with and it obviously paid off for him because in 1997 they were able to sell the bottling plant to PepsiCo the sale price it wasn't publicly disclosed but he used the money from that together with a 25 million dollar investment from a US private equity group to build a brewery and to launch his own premium beer and Thor brought in modern German brewing equipment experienced European brewers

[00:07:46] and even the bottles were designed to look like expensive imported beers so he really got the product and the marketing right and the timing was also perfect you see the Russian economy it had collapsed in 1998 and because the ruble was so weak imported premium beers became much more expensive so sales of Thor's beer just went through the roof and in 2002 Heineken bought his brewery for 400 million dollars and Thor cashed out

[00:08:16] with 100 million dollars now you know you have to give a lot of credit to Thor here he spent 10 years working in probably one of the most dangerous places in the world that you could do business at that time and he not only survived like he thrived but you know on the flip side then again thriving in Russia back then it raises its own questions and suspicions and rightly so because while Thor got out with 100 million dollars

[00:08:44] there are some big question marks over the whole business transfer debacle also as well as over how Thor managed to operate in that environment for so long as mentioned Thor had brought in private US equity investors into the brewing business and as he did business with them over the years while in Russia he realised that he'd much prefer to be investing in companies rather than running them himself and in fact he'd already started investing in a

[00:09:14] pharmaceuticals business in the late 1990s he borrowed some money to buy into a Bulgarian pharma company and stick a pin in that because this business it becomes the foundation of Thor's billions now Thor had always wanted to go back to the US as I mentioned he loved the US and that was his initial intention but by 2002 the business environment in Iceland it had changed massively so for a bit of context Iceland's economy it has always traditionally been heavily dependent

[00:09:44] on its natural resources you know fishing also its huge supply of cheap electricity from hydroelectric and geothermal energy but back in the 90s the then Prime Minister a guy called David Ottson he was a big admirer of the free market policies of Margaret Thatcher and Ronald Reagan so he began selling off state-owned businesses he cut corporate tax from 48% to 18% and he made Iceland a much more attractive place

[00:10:13] to do business and also as part of this free market push he decided to privatise the three main banks and so Thor with his newfound wealth he decided to get in on the act and together with his father and another business partner they bought 46% of Landsbanki the second largest bank for 145 million and outside of the actual business opportunity there was another reason why Thor wanted to invest

[00:10:43] in the bank in an interview I listened to he openly admitted that he had a chip on his shoulder over the stigma attached to his family following his father's conviction back in the 80s and he wanted to prove a point and so by buying the bank and then installing his father as its chairman Thor was attempting to rehabilitate the family name and once Iceland's three major banks were privatised in the early 2000s

[00:11:12] then things really started to take off in the country and by take off I mean they got completely out of control the banks were borrowing billions from the international financial markets and using that money to lend to businesses and ordinary Icelanders Iceland was also attracting huge amounts of money from foreign investors and this was because the interest rates in Iceland without getting too technical but the interest rates were so high sometimes as high as 15%

[00:11:42] so an investor could borrow money in Japan say at 3% interest and then use that money to buy Icelandic bonds where they could earn 15% and so long as Iceland's currency the Krona stayed strong there was a lot of money to be made and ordinary Icelanders they were getting in on this as well they were borrowing money through their own banks in foreign currencies like the Japanese yen where as I said interest rates were much lower and using it to buy houses cars and other things

[00:12:12] but again of course if the Krona collapsed the amount that they owed in their own currency would shoot up and with all of this money pouring into the country Iceland went through this massive economic boom and that the numbers are just like they're mind-boggling between 2003 and 2007 the Icelandic stock market increased ninefold property prices in Reykjavik tripled by 2006 the average Icelandic family's wealth

[00:12:42] was estimated to be three times what it had been just three years earlier and I love this stat in 2007 more Range Rovers were sold in Iceland than in Sweden and Denmark combined despite those two countries having a combined population more than 50 times larger than Iceland but look I do want to be clear here this is not just the case of point and laugh at how Icelanders

[00:13:11] lost the run themselves I could definitely pluck statistics from Ireland the US and I'm sure many other countries in the lead up to 2008 that would show just how overheated a lot of those markets were Iceland wasn't the only country that lost the run of itself but because it was such a small economy and because its banks had grown to a size the country could never really support when the whole thing came crashing down

[00:13:40] the consequences for Iceland and for the people of Iceland were particularly severe and of course it wasn't just ordinary Icelanders who were borrowing money you had this small group of very wealthy businessmen with Thor leading the charge who owned big stakes in Iceland's banks and were using them almost like their own personal piggy banks to finance the purchase

[00:14:09] of businesses all over Europe and they became known as the business Vikings and they were snapping up some of Britain's and Europe's best known retailers including like House of Fraser Hamley's Debenhams as well as investing in airlines property banks food companies across Europe like Thor's own father led a consortium that bossed the premiership club West Ham United in 2006 and I remember these business Vikings they were being

[00:14:39] hailed as this new wave of super astute businessmen but of course they weren't they were just using really cheap money that they had very easy access to with very few checks and balances to buy up businesses at inflated prices that no one else was willing to pay and Thor who at this stage was living in London was definitely the most successful of the business Vikings his two biggest investments were

[00:15:08] Activists this was a pharma company that produced generic drugs and he had grown out of that Bulgarian pharma business that I mentioned earlier and he was growing it really really quickly through acquisitions but of course it was all very highly leveraged and his other big investment was Play this was a Polish mobile phone operator and by 2005 Thor had become Iceland's first billionaire worth 1.4 billion and he was on the cover of Forbes magazine so this was

[00:15:38] huge news in Iceland it led the evening television news it dominated every front page and the people of Iceland they took pride in it which was definitely a change from the traditional Icelandic attitude where people generally didn't flaunt or talk about their wealth or success and here's a quote from an Icelandic businessman there was a huge cultural change in the old days whenever anyone got too rich they were brought back down to earth but suddenly everyone else

[00:16:08] decided to try and join the rich everyone believed the markets would take care of us this is in 20th

[00:16:48] years birthday I was sitting on top of the world. But in an interview that I heard from a few years ago he did say that even though everything looked brilliant at that time his intuition was telling him that it had all gotten a bit too crazy you know that everything was a bit too easy but he did admit that there was another part of him that was telling him to keep going because these

[00:17:11] opportunities won't be around forever. And this is the thing it's easy to blame Thor for not recognizing that he was in the middle of the bubble or indeed to blame the people of Iceland. But the thing is we were all in the middle of a bubble back then in Ireland, in Iceland, in the US, in lots of developed countries and we knew it. Like there had been warnings for years maybe that was the problem. The doomsayers had been continually predicting that the bubble would burst but you know

[00:17:40] with every passing month when nothing happened we continued to fool ourselves. But we knew that we were in a bubble of some sort. And I remember some people putting forward the ridiculous theory that we were in this new age where the traditional boom and bust cycles were a thing of the past while also then you had the more you know cautious commentators and politicians who were predicting a soft landing as in yes this would all come to an end but you know it'll be well managed it'll be okay.

[00:18:09] But the thing is like it's called a bubble for a very good reason because when it bursts it's a sudden violent action. And so from August 2007 through to September 2008 the financial markets they were getting increasingly nervous. Banks were becoming a bit more reluctant to lend money and then on the 15th

[00:18:32] of September 2008 the bubble most definitely burst when Lehman Brothers collapsed. Banks everywhere just they just stopped trusting one another. Literally overnight interbank lending stops and as we know this had a catastrophic effect on the financial system worldwide and none more so than in Iceland. And for Thor the problems they weren't just confined to his Icelandic bank. Deutsche Bank was demanding

[00:19:02] money into his pharma business or risk having its loans called in. And so on September 30th 2008 while Iceland's banking system was falling apart Landsbanki the bank that Thor had a 46 percent share of agreed to provide 153 million euro to help keep his pharma company afloat. So just think about this for a minute here was a bank in the midst of the biggest financial crisis ever struggling to find

[00:19:32] enough money to meet its own obligations. And yet it was still providing huge financial support to one of its biggest shareholders to help protect his private business. Like that stings to high heaven and I think it gives us a very good idea of what went wrong with Iceland's banking system in the years leading up to the crash. Then on Friday October 3rd Iceland's president he telephones Thor in London and tells him

[00:20:02] to come home that the banking system is close to collapse and over the next few days Thor and the rest of the banking executives and shareholders are involved in emergency meetings with government ministers trying to find some way of keeping the banks alive. But there's no way out of this. The banks are drowning in debt. Nobody is willing to lend them any more money and the government it can't possibly cover what the banks owed because the three banks had grown to nine times the size of the

[00:20:32] country's economy. So the government just can't prop them up and as a result between October 7th and 9th the three banks collapsed. And the consequences for the ordinary Icelanders as we know they were devastating. The currency, the corona, collapsed. Inflation soared. Many people saw the amount they owed on their mortgages and loans more than double overnight. Then you had thousands of people losing their jobs

[00:20:59] in construction, retail but particularly financial services while loads of others saw their investments and pension savings lose a huge amount of their value. So the scale of the disaster relative to the size of Iceland. It was extraordinary. Now I've read plenty of articles praising Iceland for letting its banks fail. But just to be clear it didn't have a choice you know. While other countries were rescuing banks

[00:21:29] considered too big to fail, Iceland's banks were simply too big to save. The government, just to reiterate, it didn't have the money to rescue the banks or repay their enormous debts. Remember the banks had grown to nine times the size of the economy. But what the government did do was protect ordinary Icelanders' bank deposits by setting up new banks so people could still access their money and businesses could continue

[00:21:55] operating. And rather than leaving Icelandic taxpayers responsible for all the money the banks owed, the losses were left to the bank's creditors. Now this initially did damage Iceland's reputation with international investors. But by 2011, just three years later, Iceland was borrowing on the international markets again. And the reason I bring this up, and forgive me for being a bit local here, but I am from

[00:22:20] Ireland, and I just can't help but think what happened in Iceland, it raises some serious questions about the decision of the Irish government back in 2008 to guarantee not just ordinary people's savings, but the enormous debts owed to the banks major creditors, leaving the Irish taxpayers to pick up a huge part of the bill when the banks collapsed. Anyway, I know, I digress. Let's get back to Thor. He could rightly argue at the time

[00:22:50] of the crash that, at least numerically, he lost more than anyone else. And he did. There's an article from the UK Times. Nobody has lost money faster than Thor Bjorkgolfur. When he went to bed on Friday, October 3rd, 2008, he was worth £3 billion. By Monday night, in his own words, everything was gone. But, like, as you can

[00:23:13] imagine, the Icelandic public, they had very little sympathy for Thor. They're enraged. There are protests outside Parliament. They want answers about how the banks were run. And, as the poster boy for Iceland's success, as well as one of the major shareholders in one of the now-defunct banks, Thor became one of the lightning rods for this anger. His home was graffitied. A brick was thrown through the window of

[00:23:41] his house one night while he was in there with his wife and kids. Thor later said, I was treated like a pariah, as a man who supposedly brought down an entire economy. I felt so bad about everything. It was overwhelming, all-pervasive. I felt like I was being sucked into a black hole. And look, like, of course Thor wasn't solely responsible for the crash. But, he does bear some responsibility, as was highlighted in the official investigation into the banking crash.

[00:24:10] The report, it was very, very critical of the close relationships between the banks and the businessmen like Thor, who owned them or had significant shareholding in them. In particular, the report found that Thor and his father were the bank's biggest borrowers, owing more money than the bank's entire shareholder equity. And the investigators found that they had enjoyed unusually easy access to loans, with the bank bending the rules designed to prevent

[00:24:40] this sort of thing from happening. Now, Thor disputed parts of the report. But, two days after it was released, he published a full-page apology in an Icelandic newspaper, where he wrote, I request forgiveness from all Icelanders for my role in the banking collapse. I request your forgiveness for my complacency towards the danger signs which arose.

[00:25:04] I request forgiveness for having not succeeded in following my instincts when I realised the danger. I request your forgiveness. Now, I know when this was published, he came in for a huge amount of criticism. Many thought the apology was self-serving. A lot of people were sceptical as to its sincerity. And look, the truth of the matter is that only Thor can say for certain if this was a sincere apology.

[00:25:33] But to me, the way that it's worded, the way that he keeps asking for forgiveness, it does make me think that this wasn't, you know, concocted by your typical PR or damage control consultant. It feels like a very personal apology. It feels vulnerable. You might think I'm being naive. Who knows? And maybe Thor was naive to think that the Icelandic people were ready to forgive him.

[00:25:59] But regardless of all that, I do think Thor deserves some credit. Because at the very least, he's publicly taking responsibility for his role in the collapse. And also crucially, it should be noted that Thor himself wasn't charged with any crime, while plenty of others were. Because Iceland was one of the very, very few countries in the world

[00:26:24] after the 2008 crisis that actually jailed senior bankers and some of the powerful businessmen involved in the banking boom. More than 30 people were convicted, including the chief executive of Thor's own bank, with some receiving prison sentences of five years or more. Now, of course, there were plenty of people in Iceland who felt that some of the wrong people had been prosecuted, or that others had escaped punishment altogether. And I'm sure there are

[00:26:53] plenty who feel that Thor got off lightly. But the fact of the matter is that there was nothing to pin on him. Borrowing hundreds of millions isn't a crime. In relation to his own losses, when the crash happened, Thor's companies owed around $10 billion, of which he personally guaranteed almost a billion

[00:27:14] dollars. But the severity of the financial crisis, it actually worked in his favour. You see, his creditors didn't want to sell his investments into a panicking market for a fraction of what they might eventually be worth. So, rather than forcing him into bankruptcy, they were prepared to work out a deal. Thor then hires a restructuring expert, and in July 2010, he reached an agreement with his creditors.

[00:27:42] He has to give up his house in Reykjavik, his holiday cottage, his private jet, his Ferrari. But, you know, I wouldn't feel too bad for Thor. He does get to keep his £10 million London home, and crucially, he's allowed to keep his stakes in activists, play, and several of his other businesses. Although, any money he makes from them has to go towards paying off his debts. And activists, the pharma company, that's where the biggest

[00:28:11] opportunity appears. Because in 2012, Thor helped arrange the sale of the company to an American pharma business for $5.6 billion. And while Thor didn't get any cash from that sale, as most of the money went into paying off his debts, he negotiated an agreement that gave him shares in the new company, if he met certain performance targets. And when those targets were met the following year,

[00:28:36] the shares Thor received, they were worth more than $700 million. So by July 2014, he's able to settle his remaining obligations. So six years after the banking collapse, Thor has cleared his debts. Then his Polish telecom investment, the company called Play, that became Europe's largest IPO in 2017. And in 2020, Thor sold his stake in a deal that netted his investment firm around $800 million.

[00:29:04] And then over the years, he's also made some really good early investments in companies like Zwift, Deliveroo, Monzo, and Stripe. And as of 2026, Forbes estimates that Thor's wealth is around $1 billion. And he's still Iceland's richest man. And unfortunately, Thor isn't the only one who's bounced back, because Iceland has recovered really, really well. And today, it's one of the wealthiest countries in

[00:29:32] the world, helped by a huge growth in tourism, alongside its traditional strengths in fishing and cheap energy. Now, as for Thor, he lives in Milan. He's best friends with David Beckham and film director Guy Ritchie. The three of them go on fishing trips together in Iceland. And, you know, I have to give him kudos for his resilience. Like, this guy is tough and smart. You can't do 10 years

[00:29:57] in Russia and come out with $100 million without having a lot of street smarts and, let's say, resourcefulness. And then losing your fortune, becoming public enemy number one, and having the tenacity and, again, the resilience to keep fighting and claw your way back. That is not easy. But what about respect? Because remember, for Thor, respect is everything. Remember the quote?

[00:30:26] Respect is the number one thing that occupies my mind. And yes, because of his involvement in Iceland's banking collapse. But for me, I think more so because of the shadiness, the big question, marks that surround that business takeover, that business transfer in Russia, Thor has ended up with some serious question marks hanging over his own reputation. And that's the big irony here,

[00:30:53] isn't it? Here's a man who spent so much of his life trying to restore his family's good name as a result of actions undertaken by his father in the 80s, only to end up with big question marks over the family's name still as a result of actions that he took in the 90s. And I think that's why Thor's story is such a fascinating one. And that brings us to listeners' emails. And this one comes

[00:31:20] from Susie, who would love me to do the story of Coco Chanel. That is a great suggestion and I will be covering Coco Chanel over the next few months, I promise, Susie. Thanks so much for listening and for the recommendation. And remember, if you have any comments, any corrections or any story you'd like me to cover, email me at info at gbspod.com. All the best folks.