Icelandic bank to sue government over administration

Kaupthing is suing the government over its handling of the stricken Icelandic bank's UK subsidiary in a legal action bankrolled by the Icelandic government, The Times reported.

Lawyers for Kaupthing, formerly Iceland's largest bank, will file a lawsuit at the High Court in London today attacking the way in which Britain forced Kaupthing Singer & Friedlander into administration on October 8 last year, according to the newspaper.

The lawsuit, which has the 'full support' of the Icelandic authorities, including financial backing, comes after weeks of threats from Reykjavik.

Iceland took control of Kaupthing on October 9, the day after Kaupthing Singer & Friedlander was put into administration, and Reykjavik blames Britain for the collapse of the group.

The action, prepared by Weil, Gotshal & Manges, an American law firm, will take the form of a judicial review, which allows individuals or businesses to challenge government decisions. Northern Rock shareholders are using the same process to question the government over its nationalisation of the mortgage lender.

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Kaupthing Singer & Friedlander sues Britain over UK subsidiary