All three of the small North Atlantic island's top banks collapsed in quick succession in October 2008 due to big debts incurred during a rapid overseas expansion.
A Reykjavik court sentenced Glitnir's former chief executive, Larus Welding, and former head of corporate finance, Gudmundur Hjaltason, each to nine months in jail, of which six months were suspended for two years. They had denied the charges.
Prosecutors said the two approved a loan to a company which owned shares in Glitnir so that the company could in turn repay a debt to Morgan Stanley.
The decision, taken outside the regular decision-making process, meant Glitnir was too exposed to the company and cost the bank at least 53.7 million euros ($71 million), the prosecution said.
The sentence was less than the jail terms of at least five years demanded by Iceland's special prosecutor, who is looking into alleged wrongdoing connected to the crisis.