Baugur fears grow after turmoil in Iceland

Baugur moves to quash speculation

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Concerns have grown about Baugur's investments in the UK retail sector as the economic turmoil in Iceland mounts.

Baugur last week said that its retail interests, which include House of Fraser and Mosaic, would be unaffected by the nationalisation of Icelandic bank Glitnir. Investment vehicle Stodir, which is controlled by Baugur chairman Jon Asgeir Johanesson, went into administration.

House of Fraser chairman also wrote to the department store group's suppliers to reassure them that the business was insulated from any specific problems that Baugur may have as a result of the turmoil.

However, fears were renewed over the weekend, as press reports said that insurance company Euler Hermes pulled insurance cover for some of Baugur's suppliers.

Icelandic bank Kaupthing also entered crisis talks over the weekend fuelling concerns about the Icelandic economy.

According to The Independent on Sunday, Baugur said that the withdrawal of credit insurance by Euler was a due to a misunderstanding of the impact of the economic situation in Iceland.