Icesave, the UK online bank owned by Landsbanki, had 229,000 British depositors, all of whom were covered by the Treasury guarantee

Investigators probing the collapse of the Icelandic bank Landsbanki are to seek up to $2bn (£1.37bn) in damages from its former owners and directors as the authorities in Reykjavik prepare legal action against those involved in the collapse of the country's banking sector.

The winding-up committee of Landsbanki, which was nationalised by the Icelandic government in 2008, will demand compensation for the failure of the bank from three former owners and its two chief executives, according to reports.

Landsbanki was the owner of Icesave, the UK online savings bank that had 229,000 British depositors, all of whom were guaranteed their deposits by the former Labour government. Subsequent efforts to force Iceland to reimburse the Treasury were derailed in March when Iceland's president, Ólafur Grímsson, called a surprise plebiscite that rejected the repayment terms. About 98% voted against the settlement.

Last summer Landsbanki's winding-up committee hired a team of specialists from Deloitte to investigate events at the bank before 2008. Herdís Hallmarsdóttir, who is on the winding-up committee, says the investigation is making good progress. Demands for damages from Landsbanki management and proprietors could come in the next few months.

Two of the three former owners of Landsbanki, Björgólfur Gudmundsson and Magnús Thorsteinsson, are now legally bankrupt. The third, Björgólfur Thor Björgólfsson, remains liquid. The chief executives of the bank were Sigurjón Árnason and Halldór J Kristjánsson.

The banking meltdown saw domino failures of Iceland's three largest banks, Kaupthing, Landsbanki and Glitnir, as well as the collapse of several investment empires, the best known of which in the UK was Baugur, until recently one of the largest and most prolific investors in British high street chains. The crisis forced the island to seek emergency loans from the International Monetary Fund and others.

Icelandic authorities recently arrested the former chief executive of Kaupthing in the most high profile case so far by prosecutors investigating the country's banking failures. He was detained on suspicion of multiple offences, including embezzlement, falsifying documents, and stock and bond trading violations.

The Icelandic investigation into Kaupthing is supported by Britain's Serious Fraud Office. Kaupthing had a large operation in the UK and counted the property tycoons Vincent and Robert Tchenguiz among a number of high-profile clients. Many UK local authorities, charities and individuals lost money in the collapse.

Last week Baugur's boss, Jon Ásgeir Jóhannesson, and a number of former directors of Glitnir were hit with a $2bn US lawsuit that accuses them of a "sweeping conspiracy" to control the bank and, latterly, drain cash out of it - actions that contributed to its eventual collapse.

In Iceland, the main prosecutor, Olafur Hauksson, has repeatedly complained not enough money has been set aside for an investigation of the magnitude he is dealing with. In the Kaupthing case alone, he announced recently that at least 20 former executives were considered suspects. Interpol has issued an international arrest appeal for that bank's former chairman, Sigurdur Einarsson, who lives in London.

An Icelandic parliamentary inquiry into the nation's financial and economic crisis, published last month, laid much of the blame on the former bank heads, who had taken "inappropriate loans from the banks" they worked for.

In its annual credit report on Iceland, Moody's said that the country's economy had stabilised somewhat following its massive banking and currency crisis, but fiscal tightening and weak investment would cause the recession to linger well into 2010. The recovery is also threatened by the continued failure to reach an agreement over the terms of repaying the UK and the Netherlands for their citizens' Icesave deposits. Failure to resolve the dispute has delayed the resumption of financial flows into the country, Moody's said.