The move to nationalise Kaupthing prompted a diplomatic row between the UK and Iceland.
Geir Haarde, Iceland's prime minister, blamed Kaupthing's “unfortunate” fall into state hands on “action taken against Kaupthing by the British government”. He and Sigurdur Einarsson, chairman of Kaupthing, said the decision by the British government to put its UK operations in administration was partly responsible for the collapse.
The nationalisation of Kaupthing comes after Iceland passed emergency legislation this week to take over struggling banks. Landsbanki – owner of the Icesave savings business popular in the UK and the Netherlands – and Glitnir were this week taken over by the Icelandic financial regulator as the island economy came close to collapse.