The outlook for bondholders in Icelandic banks is looking “increasingly bleak” following the restructuring of the country’s crippled banking sector, as creditors are likely to be marooned in the old banks, which have ceased to service their outstanding debt.

The Icelandic Financial Supervisory Authority has so far announced the creation of two new government-owned banks, New Landsbanki and New Glitnir, as part of a restructure, although an independent research firm has said that foreign bondholders and banks will remain in the old banks.