HOWZAT

However, later on the Bank's Governor, David Oddsson, said the amount of the loan had been "overstated", adding "we are to blame for the overstatement."

Iceland’s prime minister, Geir Haarde, said today: "People from our side will be going to Russia today or early tomorrow morning to discuss the exact terms.”

But he added: "With this, like everything else, nothing is certain until it’s certain.”

But Iceland rejected a proposal that it should use an International Monetary Fund (IMF) facility to help it tackle its financial crisis, a government official from one of the Group of Seven leading industrial nations said today.

Deposit protection depends on location

Countries across Europe are stepping forward with bolstered guarantees for savers but the amounts vary considerably

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The source said G7 deputy finance ministers discussed Iceland’s situation during a conference call on Monday evening, before Iceland took over its second largest bank, propped up its battered currency and sought the loan from Russia.

"Japan proposed using an IMF facility to help Iceland but Iceland did not want to ask the IMF for money,” the official, who was familiar with the content of the phone consultations, said, speaking on condition of anonymity.

“Iceland does not want to be singled out as a country that needs IMF help. Even last summer, Iceland preferred to ask the central banks of some Nordic countries for help rather than go to the IMF for money,” the official added.

The United States and Britain had exerted pressure on Iceland to seek IMF help, the official said, adding that a large amount of deposits in Icelandic banks were owned by British customers.

The Icelandic crown continued to be volatile in today's trading, forcing the central bank to introduce a currency peg at a value of 131 per euro. It was last trading at 144 per euro.

In a statement, the Icelandic financial regulator said: "“Based on new legislation, the Icelandic Financial Supervisory Authority proceeds to take control of Landsbanki to ensure continued commercial bank operations in Iceland."

“Domestic deposits are fully guaranteed, as declared by the Government. Landsbanki’s domestic branches, call centres, cash machines and internet operations will be open for business as usual. The objective of the IFSA’s action is to guarantee a functioning domestic banking system.”

OMX Group, the stock exchange operator that owns seven European stock exchanges, also said that it had suspended Landsbanki from trading on the Helsinki, Stockholm and Copenhagen exchanges due to uncertainty about its situation.

The suspension will remain in place until further notice.

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