Baugur has issued a statement denying reports yesterday that the Icelandic government may take stakes in UK retailers as part of the country's financial restructuring.

"In the wake of the collapse of the Icelandic banking system, Baugur Group has been in talks with its relationship banks regarding the restructuring of the company with the aim of maximising the long-term value of its assets and dispel any uncertainty regarding the future," a Baugur spokesman said.

However, she said this would not involve the government directly taking control of Baugur's stakes in UK retailers. Baugur has stakes in companies including House of Fraser, Mosaic Fashions, Hamleys and Iceland.