The Icelandic investment bank Straumur Burdaras says the country's Financial Supervisory Authority is shutting it down due to liquidity problems.
The government took control of Iceland's three biggest banks in October after the oversized financial sector collapsed in the wake of the global credit crunch.
Straumur was owned by Bjorgolfur Thor Bjorgolfsson, a wealthy and influential businessman who was one of the main shareholders in Landsbanki, Iceland's second-biggest bank which was taken over in October.
Straumur was Iceland's fourth-biggest bank and the last of the big banks to remain independent. Straumur chief executive William Fall has resigned, effective immediately, the bank said.
Straumur posted a net loss of €574.5m in the fourth quarter. According to Icelandic media, the bank was to have paid €33m in debt due today but had only €15.3m available.
