It is still quite small, however. At the end of 2008, it had 53.4 billion krona in assets, compared with 5.35 trillion krona in 2007 for Kaupthing Bank, the biggest bank in the country. MP Bank is trying to expand by taking advantage of opportunities created by the meltdown in Iceland’s banking system, but it has hit some roadblocks. After Spron Savings Bank, the largest savings and loan in Iceland, failed earlier this year, MP Bank offered to buy three of the bank’s branches. The deal has not been approved because all of Spron’s deposits have been transferred to Kaupthing. So, instead of buying Spron’s branches, MP Bank rented the largest one in May and hired 16 of the bank’s employees. Though bigger banks in Iceland remain open and fully operational, Petursson speculated that MP Bank was picking up customers because of the negative associations people made with failed institutions.

That competitive advantage may start to evaporate this month. On July 17, Iceland plans to recapitalise the banks it is overseeing as the first major step in a plan to make its banking system fully independent again.