JC Flowers has sold Dutch bank NIBC to Icelandic investor Kaupthing for €2.99bn. The price includes €1.6bn in cash and €1.4bn in newly issued Kaupthing shares.

Kaupthing will not be keeping NIBC's €391m US sub-prime mortgage portfolio, which will be retained by JC Flowers.

Ratings agency Standard & Poor's put NIBC on negative watch last week after the bank reported €137m in losses from its American asset-backed securities investments.

JC Flowers bought the bank for a rumoured €2bn in 2005.