Landsbanki, the failed Icelandic lender, is to sell its stake in Iceland.
The bank holds a 67% stake in the frozen food chain and is kicking off a sale process, according to reports.
Iceland CEO Malcolm Walker owns a 24% stake. He tried to buy Iceland for about £1bn in October last year.
"We are starting to look for advisers regarding Iceland Foods, so we are beginning the sale process there," a spokesman for the bank said.
Gulf investors eye £1.5bn bid for Iceland (13 December 2010)
‘No more skiving’: Walker poised for buyback of Iceland (16 October 2010)