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That didn’t take long. Less than a week after Iceland lifted its capital controls, Goldman Sachs and a trio of hedge funds have ploughed money into a local bank.

In a sign of the investor interest for the tiny island of 330,000 inhabitants, Goldman together with Och-Ziff Capital Management, Taconic Capital and Attestor Capital have bought almost 30 per cent of Arion Banki, the successor to the failed Kaupthing.

Iceland became one of the biggest victims of the 2008 financial crisis when Kaupthing and two other domestic lenders imploded. The Nordic island was forced to implement capital controls to protect its currency and it only lifted them last Tuesday.

All three of the successor banks to Kaupthing, Glitnir and Landsbanki have been touted for sale in the past few years but a combination of rapid, tourism-fuelled economic growth, relatively high interest rates and the end of capital controls has attracted foreign investors to Iceland anew.

Arion is still aiming to list its shares, perhaps later this year, with Goldman and the hedge funds given an option to increase their holdings by 22 per cent before then.

Paul Copley, chief executive of Kaupthing, which acting on behalf of its creditors still remains the largest shareholder in Arion with 58 per cent, said: “In completing this deal, which is the largest equity portfolio investment by foreign parties in Icelandic history and immediately after the lifting of capital controls, we have secured international investors with a medium to long term view of their investment in Arion.”

He added: “All of them are existing investors in Kaupthing and have chosen to re-invest in Iceland rather than move their money offshore, which is the strongest possible signal of their confidence in both Iceland generally and Arion specifically.”

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