Concern over the impact of Iceland’s financial crisis on Baugur’s retail interests in the UK has continued, despite the investor’s attempts to calm fears.

Over the weekend, it emerged that credit insurance giant Euler Hermes has withdrawn cover for suppliers to various Baugur-backed retailers.

Separately, Kaupthing, the Icelandic bank and a financial partner of Baugur, was at the centre of intense speculation about its future, as talk circulated about a merger with counterpart Landsbanki and the possibility of a sale of overseas assets by Icelandic banks.

A Baugur spokesman told The Independent on Sunday that the withdrawal of credit insurance was surprising and said: “We believe the action has been taken due to a misunderstanding of the impact of the economic situation in Iceland. We have stated clearly that Baugur’s portfolio companies have no exposure to the Icelandic economy. The vast majority are funded by international banks and are performing well in the current market conditions.”

Kaupthing chairman Sigurdur Eniarsson said the bank was “strong and diversified”. He said: “We ask people to look at the facts, not rumour and innuendo.”

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