Sir Philip Green, owner of BHS and Topshop, is in talks with Icelandic government officials about investing up to £2bn in Baugur, the retailing group which includes House of Fraser, Karen Millen and Hamleys.

Baugur has seen part of its assets frozen in the fallout from the Icelandic banking crisis and Sir Philip, who has steered clear of equity markets and kept his assets safe, could emerge from the UK’s economic slowdown with some of the Icelandic group’s stores.