The $286m investment will be made through Q Iceland Holding, a company owned by Sheikh Mohammed.

He said that he had been following Kaupthing for some time and felt this was a good time to make a long-term investment in the bank.

Kaupthing’s shares have been falling in value since October 2007.

“We are continually focused on attracting new investors to the bank and we are happy to see that our strategy of increasing the diversity of our shareholder base has proven fruitful,” says Sigurdur Einarsson, chairman of the bank.