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REYKJAVIK, July 24 (Reuters) - A group of Chinese investors is in talks with the bankruptcy estate of Icelandic bank Islandsbanki, which was previously known as Glitnir and failed in 2008, over buying a stake in the up-for-sale bank, a finance ministry source said on Thursday.
The source told Reuters that among the investors were Chinese bank ICBC, insurer China Life Insurance Company and a large Chinese private equity fund.
Creditors own 95 percent of Islandsbanki through ISB Holding while the government owns 5 percent. Steinunn Gudbjartsdottir, chairperson of the bankruptcy estate, said the estate was at an early stage of talks with investors but did not identify these.
"It's pleasing that there is an interest in the bank. It shows foreign investors have a strong belief in the future of the Icelandic economy and that the country can lift capital controls," she said.
Glitnir and Iceland's other biggest banks, Landsbanki and Kaupthing, crumbled within weeks of each other under large debt, sending Iceland into deep recession and prompting the introduction of capital controls to stop a currency tailspin.
Creditors to the old banks took large stakes in the new domestic lenders which emerged from the crisis and have been waiting for several years to get their money back.
The capital controls cannot be removed until a deal to wind up the left-overs of the old banks - around 2,500 billion Icelandic crowns ($21.73 billion) in cash, shares and bonds - is reached with creditors.
The finance ministry source said ISB Holding's share of Islandsbanki was estimated at 165 billion crowns in March.
Gudbjartsdottir said the investors in talks with the bankruptcy estate were all highly qualified as owners of financial businesses.
$1 = 115.0600 Iceland Kronas Reporting by Robert Robertsson, Writing by Anna Ringstrom; Editing by Alistair Scrutton and Mark Potter