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SFO in Icelandic bank probe

THE SERIOUS Fraud Office (SFO) is preparing to announce a formal investigation into collapsed Icelandic banks that operated in the UK.

The inquiry, which will examine Kaupthing, Glitnir and Landsbanki, follows months of intelligence gathering by officials at the SFO and is expected to be announced soon.

The SFO has been in close touch with Eva Joly, the French special investigator who was brought in by the Icelandic government to look at the flow of money between Iceland and the City.

She has held meetings with SFO officials in London and, earlier this year, a team from the SFO travelled to Reykjavik to meet the Icelandic authorities, which are already conducting their own investigations in to what brought down the banks.

The Icelandic banks, which had large customer bases in the UK, went under last October, leaving 300,000 British savers unable to get their money and institutions facing billions of losses. A number of charities and local councils were among those with stranded funds.

Following the collapse, the Treasury paid out £7.5bn to compensate UK savers, although £2.3bn of this will be repaid by Iceland over the next 15 years.

Two-thirds of the bank’s corporate clients had links to London and the bank had relationships with a number of leading UK entrepreneurs - including Sports Direct owner Mike Ashley and property tycoon Robert Tchenguiz.

Tchenguiz, the former billionaire property investor who has lost huge sums in the recession, was one of Kaupthing’s biggest clients. He was also a director of its largest shareholding institution.