THE TELEGRAPH: The Icelandic government has seized the country's second-largest bank and pleaded with Russia to hand it a £3bn life-line loan in order to stave off "national bankruptcy" as it continued to come to grips with its harsh new economic realities.
Prime Minister Geir Haarde rushed emergency measures through the Nordic nation's parliament to nationalise Landsbanki and give the country's largest bank, Kaupthing, a £400m loan to bolster its balance sheet.
Landsbanki has been put into the control of the Icelandic financial regulator to prevent the meltdown of the country's financial system, triggering the collapse of its popular internet savings arm Icesave.
Mr Haarde confirmed that he was sending a delegation to Iceland's "new friend" Russia to negotiate a £3bn capital injection into the country's finances, after the country's traditional Western allies refused to help the collapsing banking system.
The loan from Russia will be used to shore up the Icelandic krona, which tumbled by 30pc on Monday, rather than the country's two nationalised banks, Landsbanki and Glitnir.
However it was reported that Iceland chose not to seek the help of the International Monetary Fund, a suggestion allegedly first made by Japan.
The Icelandic krona has now been pegged at 131 against the euro as an emergency measure and the stock exchange has banned short-selling of bank shares.
The new manager of Landsbanki, Halldor Kristjansson, placed part of the blame for the nationalisation of the bank on savers trying to withdraw their money from Icesave, which has 300,000 British customers with a collective £4bn of savings.
Asked about the run on Icesave, Mr Kristjansson said: "That by itself caused additional problems on top of everything else. There are so many interwoven factors. That wasn't the main problem, although it was very big." Financial Crisis: Iceland Nationalises Bank and Seeks Russian Loan >>> By Rowena Mason, in Reykjavik | October 8, 2008
Watch BBC video: Iceland Looks to Russia for Loan: Icelandic Prime Minister Geir Haarde has confirmed that the country is to hold talks with Russia over a loan to stabilise the troubled banking system. >>> | October 8, 2008
Watch BBC video: Iceland Guarantees Accounts: Iceland's government is to offer an unlimited guarantee for all bank customers' savings accounts. Hugh Pym reports >>> | October 8, 2008
Watch BBC video: Financial Fears in oceland: Iceland's government is to offer an unlimited guarantee for all bank accounts, following fears about savings.
Members of the public, Editor-in-chief of t24 Óli Björn Kárason, and Vilhjálmur Bjarnason, who is the leader of the shareholders union, talk about financial problems in their country. >>> | October 8, 2008
The Dawning of a New Dark Age – Dust Jacket Hardcover, direct from the publishers (UK) >>>
The Dawning of a New Dark Age – Paperback, direct from the publishers (UK) >>>
