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Norway blocks sale of Icelandic bank Kaupthing's assets

Government officials in Norway have moved to block the sale of Icelandic bank Kaupthing's stake in a major Norwegian insuance company, saying the $162 million US in assets may be needed to cover its obligations in Norway.

Government officials in Norway have moved to block the sale of Icelandic bank Kaupthing's stake in a major Norwegian insurance company, saying the $162 million US in assets may be needed to cover its obligations in Norway.

The move on Tuesday came a day after Dutch finance group ABN AMRO Bank NV announced an agreement to sell Kaupthing's approximately 10 per cent share of insurer Storebrand to Royal Bank of Scotland PLC.

Iceland's government last week placed Kaupthing — the country's largest bank — under public control after it faced collapse. Iceland said comments made by the British government about Kaupthing's U.K. subsidiary were partly to blame for the bank's troubles.

On the weekend, the Norwegian government placed Kaupthing Norway under public administration "to facilitate the reasonable handling of debts in the subsidiary and to prevent uneven treatment of creditors in Norway."

The blocked sale of the Storebrand stake was announced Tuesday in a statement to the Oslo stock exchange by Bjarne Borgersen, who was appointed to administer the liquidation of Kaupthing Norway.

A government official said he believes the 44.9 million shares of Storebrand will now be under the control of either the liquidation committee or the Norwegian Banks' Guarantee Fund, which has guaranteed up to $322,000 US each for an estimated 1,000 depositors in Kaupthing Norway.

Iceland may sue British government

Iceland was angered after the British government used anti-terrorist legislation to seize the U.K. assets of another Icelandic bank, Landsbanki. At the same time, the British Treasury said action had been taken to protect depositors in Kaupthing's British subsidiary.

A lawyer for the Icelandic government said the comments may have led depositors to think the bank's assets had been seized.

"They should have been aware that this would cause the collapse of the Kaupthing business in Iceland, which it seems to have done," said Richard Beresford, who is looking into suing the British government.

Beresford appeared on a British television program, which said the Prime Minister's Office had sent a letter on the weekend to Norwegian authorities making it clear only Landsbanki's assets had been seized.

"To clarify the situation regarding Icelandic companies, I am confirming it is only Landsbanki's assets that have been frozen in the U.K.," the letter said. "No other Icelandic company's assets have been frozen."

A spokesman for Iceland's Finance Ministry told the program: "It is no good telling us now that Kaupthing's U.K. assets have not been seized. It's too late, the whole bank has collapsed."

With files from Reuters

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