Landsbanki faces Serious Fraud Office inquiry

By Jonathan Russell 9:30PM GMT 26 Mar 2011

The news comes just weeks after the SFO arrested entrepreneurs Vincent and Robert Tchenguiz as part of an investigation into the collapse of Kaupthing. The brothers deny any wrongdoing.

The SFO’s investigation into Landsbanki is understood to be focusing on the days and weeks leading up to the collapse of the bank in October 2008. Investigators are said to be keen to track the movement of funds, much of them generated through the bank’s UK subsidiary Icesave, prior to the bank being taken over by the Icelandic government.

The SFO is working in cooperation with investigators in Iceland and Luxembourg where Landsbanki had a major subsidiary. In Iceland, investigators are also looking at so-called “share support mechanisms” whereby loans granted by the Icelandic banks were used to buy shares in the same bank, thus boosting its shareprice.

As was the case with the other Icelandic banks, Glitnir and Kaupthing, the major shareholders in Landsbanki were also its major borrowers. The largest shareholders in Landsbanki were Icelandic businessman Bjorgolfur Thor Bjorgolfsson and his father.

UK savers were exposed to the collapse of the bank through its subsidiary, Icesave.

Telegraph