ICELAND/NETHERLANDS - NIBC chief executive Michael Enthoven has resigned after major Icelandic bank Kaupthing announced it will not proceed with its €3bn acquisition of the Dutch investment bank.

Kaupthing said this morning "due to the current instability in the financial markets", it had decided not to pursue the deal with NIBC's owner, US buyout firm JC Flowers.

All relevant regulatory submissions have been withdrawn and the share purchase agreement has been terminated, added the company.

On Monday, news reports stated Iceland's financial regulator, FME, was planning to block the deal following concerns of Kaupthing's financial strength, though a spokeswoman denied the rumours at the time, arguing Kaupthing's application regarding the acquisition was still being processed. (See earlier IPE Story: Kaupthing denies NIBC deal is in trouble)

Today, the spokeswoman commented via e-mail: "The process regarding Kaupthing´s application to acquire NIBC was on-going and hence no decision had been taken when the parties decided not to proceed with the announced acquisition."

Kaupthing, which has said in the past it wants to expand through acquisitions, concluded in a statement: "In light of this development, the proposed rights issue in Kaupthing Bank in the first quarter of 2008 has also been cancelled."

Nobody at the bank today was available for further comment.

NIBC announced in a separate statement Michael Enthoven, and Jurgen Stegemann, chief risk officer of NIBC Holding and NIBC Bank, have offered to step down from their respective positions and the supervisory board has accepted these resignations.

"They recognise the need for NIBC to adapt its business model in the new circumstance," said the firm in its statement.

Kaupthing announced the planned purchase of NIBC, previously owned by Dutch pension funds ABP and PGGM but sold to JC Flowers in 2005, last August - less than a week after the Dutch merchant bank was one of the first to reveal massive losses in its sub-prime portfolio.

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