OSLO, April 12 (Reuters) - Norway's financial regulator is concerned about possible risks posed by Icelandic bank Kaupthing KAUP.IC gaining too much sway over leading Norwegian life insurer Storebrand (STB.OL), a newspaper reported on Thursday.
The Kredittilsynet regulator was not immediately available to comment on the report in daily Dagens Naeringsliv, which signals that fellow Norwegian insurer Gjensidige is gaining the inside track in the race to take over Storebrand, a $4 billion company.
Oil-rich Norway has a history of corporate nationalism and successful state campaigns to block foreign companies from taking over Norwegian financial or industrial firms.
Dagens Naeringsliv said the watchdog sent the finance ministry a report outlining its concerns if Kaupthing sought to increase its stake in Storebrand to more than 20 percent.
Norway's finance ministry gave both Kaupthing and Gjensidige permission last month to own up to 20 percent in Storebrand, fuelling takeover talk and boosting its shares.
Kredittilsynet reportedly warned that Kaupthing may be vulnerable to shocks to Iceland's wobbly economy, had limited experience in insurance and its profile may be too risky for Storebrand, a leading player on Norway's pension fund market.
Shares in Storebrand were up 0.3 percent to 101.50 Norwegian crowns at 1006 GMT, valuing the group at around $4.2 billion. Kaupthing shares were up 0.4 percent at 1,051 Icelanding crowns.
The Icelandic giant, worth $11.5 billion, maintains that it is treating Storebrand as a "financial investment based on valuation". Kaupthing said it had nearly 14 percent in Storebrand.
"We don't agree with the Norwegian financial supervisory authority. Their assumptions are not based on sound facts," Kaupthing spokesman Jonas Sigurgeirsson said.