The FME said the report showed that, in a response to a request by the FME in 2001 for information on Landsbanki's international operations, Andersen left out two Guernsey-registered companies owned by a holding company that was foreign-registered albeit fully owned by Landsbanki.

The FME said in a statement on its website that Andersen did nothing illegal at the time but the news risked tarnishing his credibility as director of the FME.

"Our view is not that these events cast doubt on him as a fit and proper person to perform his day-to-day duties but as this information is now in the public eye, it could distract the operation of the FME and reduce public trust and confidence in the institution," the report, commissioned by the FME and posted on its website, said.

Andersen had long left Landsbanki when it and Iceland's other two main banks failed in the 2008 financial crisis under the weight of debts taken on amid rapid overseas expansion.

Daily Morgunbladid quoted Andersen, appointed FME director in 2009, as saying he would "forcefully fight" for his job and denying any wrongdoing.

(Reporting by Omar Valdimarsson via Stockholm newsroom)

• A Permanent Economic Emergency