Iceland is to investigate allegations that the Icelandic central bank “lied” to the Dutch central bank over the state of Landsbanki.

Iceland's Business Affairs Minister Gylfi Magnússon says he is taking the claims extremely seriously.

The allegations were made on Monday by Arnold Schilder, former banking supervision chief at DNB, the Dutch central bank. He was speaking before the De Wit Inquiry, the Dutch parliamentary commission charged with investigating the causes and government handling of the credit crisis.

Mr Schilder says he raised repeated concerns about the situation at Landsbanki, parent company of internet bank Icesave, which held 1.6 billion euros deposited by Dutch customers. However, he claims he was deliberately misled by the Icelandic central bank, which painted a rosy picture of the bank’s business position.

(c) Radio Netherlands Worldwide