Hermod Skånland, who was head of Norway’s central bank (Norges Bank) when the country went into its worst bank crisis ever, died at a nursing home at Jaren in Oppland County on Saturday. He was 85.
Skånland stepped down at the end of 1993, after serving nine years and riding out the storm caused by the credit crunch of the late 1980s and the resulting state takeover of the country’s two largest banks at the time, including what later became DnB NOR.
Even though he was a member of the Labour Party during Labour Party governments headed by Gro Harlem Brundtland, he advocated an independent role for Norges Bank. He won high marks for his efforts to remain apart from political authorities, also from the Conservatives.
He came under enormous criticism, however, for failing to curb the active borrowing of the mid-1980s, when Norway’s oil wealth first started visibly emerging and real estate prices shot up. So did interest rates, though, and the commercial banks wound up with large portfolios of non-performing loans that set off a bank crisis and forced a state bailout that wiped out the commercial banks’ shareholders. Some critics, including former Prime Minister Kåre Willoch, claimed Skånland should have done more to limit the banks’ lending in 1985-86.
Skånland also caught most of the criticism over huge price overruns during construction of the central bank’s new headquarters in downtown Oslo. He suffered through a record four-hour grilling in Parliament over the overruns, reported news bureau NTB, but later emerged to be widely praised for his overall performance as central banker and to stand behind some of the bank’s best results ever.
He went on to become a professor at the business college Handelshøyskolen BI, and remained active in monetary policy debates. He died at the Fagertun nursing home in Jaren. Cause of death was not reported, as is common in Norwegian media.
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