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REYKJAVIK — Iceland's Prime Minister Sigmundur David Gunnlaugsson became the first major casualty of the Panama Papers revelations, stepping down on Tuesday after leaked files showed his wife owned an offshore firm with big claims on the country's collapsed banks.

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The ruling Progressive Party's deputy leader Sigurdur Ingi Johansson, who holds the fisheries and agriculture portfolio, told reporters after a party meeting that the party planned to name him as the new leader.

Gunnlaugsson stepped down ahead of a planned vote of no-confidence, hours after asking President Olafur Ragnar Grimsson to dissolve parliament.

Iceland's PM arrives at the official resident of the Iceland President in Reykjavik Tuesday. SIGTRYGGUR JOHANNSSON / Reuters

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The president had said he would talk with the main parties before making a decision. Dissolving parliament would almost certainly lead to a new election.

On Monday, the opposition filed a motion of no-confidence and thousands of Icelanders gathered in front of parliament, hurling eggs and bananas and demanding the departure of the leader of the center-right coalition government, in power since 2013.

Gunnlaugsson is the first casualty of the so-called "Panama Papers" — millions of leaked documents revealing financial arrangements of politicians and public figures from around the world from a Panama law firm that specializes in setting up offshore companies.

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The prime minister has said his wife's overseas assets were taxed in Iceland.

But his opponents say he should have been open about the overseas assets and the company, and that he had a conflict of interest because the government is involved in striking deals with claimants against the bankrupt banks.

A government spokesman has said the claims against Iceland's collapsed banks held by the firm owned by the prime minister's wife - in which he also temporarily held a stake — totaled more than 500 million Icelandic crowns ($4.1 million).

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Iceland's main commercial banks collapsed as the global financial crisis hit in 2008 and many Icelanders have blamed the North Atlantic island nation's politicians for not reigning in the banks' debt-fueled binge and averting a deep recession.

A new election could see victory for the anti-establishment Pirate Party, according to polls the most popular political force in Iceland, which espouses grassroots democracy and transparency.