Property tycoons Robert and Vincent Tchenguiz are among nine detained in connection with the collapse of the Icelandic bank

The Mayfair investment tycoons Robert and Vincent Tchenguiz were among nine people arrested in dawn raids by the Serious Fraud Office on Wednesday as part of its probe into the collapse of the Icelandic bank Kaupthing. London-based former bosses of the bank were also targeted.

More than 130 police swooped on two business properties and eight homes, arresting seven men aged between 42 and 54. They were being interviewed in central London. Two further arrests were made in Reykjavik.

Robert and Vincent Tchenguiz issued a joint statement, confirming they had been detained. "We were arrested earlier this morning and are being questioned with regard to matters relating to our relationship with Kaupthing Bank. Both of us are co-operating fully with the investigation and are confident that, once concluded, we will be cleared of any allegation of wrongdoing."

The brothers - who have both made substantial donations to the Tory party - had been expected to host a party on board Vincent's 40-metre luxury yacht Veni Vidi Vici in Cannes on Thursday.

It is understood that Armann Thorvaldsson, who was head of Kaupthing's UK business, Kaupthing Singer & Friedlander (KSF), and Sigurdur Einarsson, Kaupthing's London-based former executive chairman and chief executive, have also been arrested. Both UK-based, they are also thought to deny wrongdoing.

Last year, Einarsson was named as a wanted man by Interpol, before agreeing to travel from London to Iceland to answer questions in a separate inquiry into allegations of market manipulation at Kaupthing. Einarsson denies these allegations.

Two years ago, Thorvaldsson published a book, Frozen Assets, that promised to explain "how one man, one bank and one country ... affected the course of world economic history". He previously told the Guardian he believes there is little "real difference" between Icelandic banks and others caught in the global credit crisis.

"We were not the only victims," he said. "Bear Stearns, HBOS, Royal Bank of Scotland, Northern Rock, all the American investment banks - all of them were essentially bankrupt. And why did the big banks not fail there?

"The UK and US governments came in and supported them. Of course, this could not happen in Iceland."

Privately, Thorvaldsson accepts that Kaupthing took big bets on Robert Tchenguiz's operations, but insists at no point was the tycoon treated as anything more than a valued client. The Serious Fraud Office has been investigating the collapse of Kaupthing since December 2009.

Of the brothers, Robert had the closest relationship with Kaupthing. His investment empire was the largest recipient of Kaupthing loans - borrowing close to €2bn (£1.72bn) when the bank collapsed in 2008 and a further €305m from its Luxembourg and UK subsidiaries. He also invested in Kaupthing shares and was a director of the bank's largest shareholder, an investment group called Exista.

The total value of loans to Tchenguiz firms had risen to the equivalent of 25% of Kaupthing's capital base in early 2008 - the limit under Icelandic lending rules. However, further lending helped take it to more than 40% before the bank failed. The commission concluded it was hard to see how loans to Tchenguiz companies had been advanced "with the interest of the bank in mind".

Privately, Robert Tchenguiz and some bank executives hotly dispute this version. They point out that the fate of the bank and many of Tchenguiz's investments had become so intertwined that a failure to pour in further loans throughout 2008 would have precipitated the downfall not just of some Tchenguiz companies but of the bank itself.

The Tchenguiz's fortunes have been severely depleted since the Icelandic banking collapse, and the brothers have been fighting court cases to protect an empire, which at one point included large stakes in J Sainsbury, pub chain Mitchells & Butlers, and a vast property portfolio.

Kaupthing and Icelandic banks Landsbanki and Glitnir failed in autumn 2008. Robert Tchenguiz subsequently revealed that the financial collapse cost him £1bn.

In February 2009, court proceedings in Reykjavik revealed that Kaupthing liquidators were looking to recover an unpaid overdraft of £643m from companies previously controlled by Robert Tchenguiz. It emerged last month that the bank's liquidators took control of some of Vincent Tchenguiz's shares in his property empire.

On Wednesday the Labour MP John Mann wrote to the prime minister demanding that he investigate donations the Tchenguiz family have made to the Tories. He highlighted a £100,000 gift from Elizabeth Tchenguiz, the pair's sister, and another £13,500 unusually donated after the election by Vincent Tchenguiz.