Tycoons Vincent and Robert Tchenguiz are among nine people arrested in police raids connected with a probe into the collapse of Iceland's Kaupthing bank.
Britain's Serious Fraud Office (SFO) said it coordinated the raids that took place at 12 addresses in London and Reykjavik and involved 135 police officers and SFO investigators.
Seven men aged 42-54 were arrested in London and two aged 42 and 43 held in Iceland.
The brothers confirmed in a statement that they were being questioned.
“We were arrested earlier this morning and are being questioned with regard to matters relating to our relationship with Kaupthing Bank.
“Both of us are cooperating fully with the investigation and are confident that, once concluded, we will be cleared of any allegation of wrongdoing,” they said.
Police vans were parked outside their offices in Mayfair and Park Lane in London earlier today.
Vincent Tchenguiz had planned to host a press party on his boat, Veni Vidi Vici, in Cannes, southern France, on Thursday. The industry is converging on the French Riviera this week for the annual MIPIM property conference.
Iceland's main commercial banks – Kaupthing, Landsbanki and Glitnir – collapsed in the space of a week more than two years ago, imploding under the weight of huge debts racked up during years of aggressive overseas expansion.
In January, Iceland's Special Prosecutor's Office searched several financial institutions, including the central bank, as part of a criminal investigation into the collapse of another Icelandic bank, Landsbanki.
The Iranian-born Tchenguiz brothers amassed a real estate portfolio worth up to 4 billion pounds ($6.5 billion) during a series of UK property booms.