(Corrects spelling of Tchenguiz at top of story)
* SFO, UK, Icelandic police team up to arrest nine
* Search and arrest operation focused on London, Reykjavik
* Tchenguiz brothers cooperating fully
(Adds Tchenguiz quote, details)
By Kirstin Ridley and Isabel Coles
LONDON, March 9 (Reuters) - Property tycoons Vincent and Robert Tchenguiz were among nine people arrested on Wednesday after police raided addresses in London and Reykjavik linked to an investigation into the collapse of Iceland's Kaupthing Bank.
More than 135 police and fraud investigators swooped on 10 business and residential premises in London and two in Iceland, arresting seven men aged 42 to 54 in London and two men aged 42 and 43 in Iceland, Britain's Serious Fraud Office (SFO) said.
The London-based Tchenguiz brothers -- two of Britain's most high-profile property entrepreneurs -- confirmed they were being questioned about their relationship with Kaupthing Bank.
"Both of us are cooperating fully with the investigation and are confident that, once concluded, we will be cleared of any allegation of wrongdoing," the Iranian-born brothers said in a brief statement.
Police officers and vans were parked outside their offices in London's upmarket Mayfair and Park Lane, a Reuters reporter said.
The SFO has been investigating the collapse of Kaupthing since last year, focusing in part on why substantial value was extracted from the bank in the weeks and days before its collapse, in which around 30,000 organisations are believed to have lost money.
TCHENGUIZ MAJOR ICELAND DEBTOR
Robert Tchenguiz was a shareholder in Kaupthing Bank -- and one of the bank's largest borrowers. He was also a shareholder and board member of Kaupthing's largest shareholder Exista, which was the bank's second-largest debtor.
Iceland's Special Investigation Committee, set up in 2008 to investigate the collapse of Iceland's three main banks, said last April that Robert Tchenguiz and "related parties" owed around 2 billion euros ($2.8 billion) on top of loan facilities he had secured with subsidiaries when Kaupthing failed.
"The big increase in loan facilities to Tchenguiz from January 2007 until October 2008 is noteworthy, in light of the fact that in late 2007 many of Tchenguiz's companies started going downhill," the committee said.
"The minutes of the loan committee of Kaupthing Bank's board state, inter alia, that fairly often the bank lent money to Tchenguiz in order for him to meet margin calls from other banks."
The Tchenguiz business empire, which once included large stakes in retailer J Sainsbury, pub chain Mitchells and Butlers and a vast portfolio of property assets valued at up to 4 billion pounds, has been severely dented since the Icelandic banking collapse.
But the brothers still maintain a high profile. Vincent Tchenguiz had planned to host a press party on his boat, Veni Vidi Vici, in Cannes, on the French Riviera, where the property industry is converging for its annual MIPIM conference.
Another Reuters reporter said the boat was closed off to visitors and the crew declined to comment.
Iceland's main commercial banks -- Kaupthing, Landsbanki and Glitnir -- collapsed in the space of a week more than two years ago, imploding under the weight of huge debts racked up during years of aggressive overseas expansion.
In January, Iceland's Special Prosecutor's Office searched several financial institutions, including the central bank, as part of a criminal investigation into the collapse of another Icelandic bank, Landsbanki.
($1=.7201 Euro)
(Additional reporting by Andrew MacDonald, Daryl Loo, Rosalba O'Brien, and Paul Hoskins; Editing by Andrew Callus and Erica Billingham)