Iceland’s largest lender, Kaupthing Bank has been nationalised and the board of directors has resigned.

The move follows the nationalisation of Landsbanki, owner of the Icesave savings business popular in the UK, and Glitnir earlier this week.

Iceland’s Financial Supervisory Authority (FME) said: ‘The action taken by the FME is a necessary first step in achieving the objectives of the Icelandic government and parliament to ensure the continued orderly operation of domestic banking and the safety of domestic deposits.

Kaupthing’s executive chairman Sigurdur Einarsson said the bank had asked the FME to take control after Kaupthing Singer & Friedlander, its UK subsidiary, was placed into administration by the UK government, putting the parent company in technical default.

The regulator used recently enacted emergency legislation to take control of the bank.

Einarsson also said Kaupthing Edge, Kaupthing’s online saving bank, had been hit by a wave of withdrawals by UK depositors in the wake of the run on Icesave.

But the bank’s Finnish operation said it was continuing operating as normal on Thursday and its Swedish business said it had enough liquid assets to cover deposits.

Both businesses were excluded from the Icelandic’s government’s move on Thursday to take control of the parent company.

Financial Times