The chief executive of Baugur, the Icelandic investment group, insisted yesterday that funding for each of its brands on Britain's high streets was secure as fears grew about the growing economic crisis in Iceland.

Gunnar Sigurdsson said that it was business as usual for Baugur, despite the nationalisation of Glitnir, Iceland's third-largest bank, and concern that the move could trigger a fire-sale of some of Baugur's best-known assets.

Stodir, a company controlled by Baugur's founder, filed for administration moments after Glitnir's collapse on Monday.

Baugur has blazed a trail across Britain's high streets in the past decade, buying up chains such as Hamleys, House of Fraser, Karen Millen and Oasis in leveraged buyouts. Several UK retailers connected to Baugur are thought to have loans with Glitnir.

Mr Sigurdsson moved to draw a line under any speculation yesterday by emphasising that most of the funding for Baugur's businesses came from international banks.

In a statement, he said: “Baugur would like to state for clarity that its assets are based in the United Kingdom, Scandinavia and the United States and as such have no exposure to the Icelandic economy.

“At the same time, the funding for these businesses is secure and the vast majority of this funding is through international banks with whom Baugur has a long working relationship. Our businesses continue to perform well in what are evidently tough market conditions. For Baugur, it is business as usual.”

Mosaic Fashions, the Baugur- controlled venture that runs seven high street chains, including Oasis, Karen Millen and Principles, yesterday reported a 6 per cent rise to £33.4 million in underlying profits for the half-year to July 26.

Derek Lovelock, Mosaic chief executive, said that international expansion had helped to offset tougher conditions in Britain. By the end of the year Karen Millen will generate more sales in Russia than inside the M25.

Mr Lovelock said: “People are just scared and bewildered at the moment and it's highly unlikely they are going to make themselves feel better by going out shopping.”

He said that he was naturally concerned about what was happening in the Icelandic economy, because of the group's business with the country, but added: “We are not aware of any effect this will have on the running of the business.”

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