THE heads of British retailers backed by Baugur, the Icelandic investment group, will seek fresh assurances at a meeting this week that their businesses will be unaffected by the banking crisis that has engulfed Iceland.

This weekend the Reykjavik government is working on a rescue plan for the ailing economy, and an announcement could be made as early as today. It is hoping to secure a large loan from overseas to help shore up the currency, the krona, which fell to record lows against the euro last week.

Bosses of the British chains owned or backed by Baugur, including House of Fraser, Iceland, Jane Norman, Oasis and Hamleys, are due to get together with Baugur executives at a strategy day in central London this Tuesday.

Although it has been planned for some time and is one of the scheduled twice-yearly meetings, the retailers will discuss the impact of the situation in Iceland and how it will affect their operations.

The government on Monday stepped in to rescue Glitnir, Iceland’s third-largest bank. That deal wiped out investors including Stodir, the biggest shareholder. Stodir is controlled by Jon Asgeir Johannesson, a millionaire businessman who is the founder and main shareholder in Baugur.

The government has denied that it needs to nationalise Kaupthing, Iceland’s biggest bank. The lender is a key player in the UK market, bank-rolling the likes of property tycoon Robert Tchenguiz and the Candy brothers, the property designers and investors. Its British interests include Singer & Friedlander, the asset-management business.

This weekend Gunnar Sigurdsson, chief executive of Baugur, which also owns stakes in quoted retailers such as Debenhams and Woolworths, said: “The situation is not going to affect Baugur. What is happening in Iceland will not flow into the UK high street as some people have tried to speculate and will not lead to a forced sale of assets.”

He said that because the assets were UK-based and banked with a range of international lenders, they would be safe. Baugur has already been in touch with the managers of its retail assets to reassure them their businesses are not threatened.

Derek Lovelock, who runs Mosaic, the Baugur-backed vehicle behind fashion chains including Oasis, said Baugur assured him that funding for the business was “intact”.

Sigurdsson added that the conglomerate’s like-for-like sales across its portfolio of British store chains were up 5% in the first seven months of 2008. Iceland, the grocery chain, is thought to be the best performer.

However, Baugur’s positions in quoted groups such as Woolworths are thought to be under water.

Separately, Kaupthing is said to have received a number of bid approaches for its UK capital-markets operation, although a source close to the bank said no specific inquiries had been received and that the unit was not for sale.

Last week, Kaupthing’s smaller rival Landsbanki sold its overseas corporate-finance interests, including British stockbrokers Bridgewell and Teather & Greenwood, to Stramur, another Icelandic bank. Icy blast, page 11

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