Iceland announces Russian loan, nationalizes bank

The central bank also loaned 500 million euros ($680 million) to Kaupthing, the country's biggest bank, to tide it through the crisis.

As the government scrambled to gain control, the central bank first announced that it had secured the Russian loan, then backtracked and said the countries had agreed to open talks on "financial issues" soon.

Russian Finance Minister Alexei Kudrin said Russia was favorably inclined toward Iceland's request for credit, the Interfax news agency reported.

Prime Minister Geir H. Haarde told reporters that Iceland had sought help from other countries, but only its Nordic neighbors had given support. "In a situation like that, one has to look for new friends," said Haarde, refusing to identify any countries that had rebuffed Iceland's appeals.

The takeover of Landsbanki came a day after trading in shares of major banks was suspended, the Icelandic krona lost a quarter of its value against the euro and the government rushed through emergency legislation giving it sweeping powers to deal with the financial meltdown.

"As declared by the government, all domestic deposits are fully guaranteed," the Financial Supervisory Authority said. "Landsbanki's domestic branches, call centers, cash machines (ATMs) and Internet operations will be open for business as usual."

Icesave, Landsbanki's Internet service, stopped processing deposits and withdrawals, according to a brief announcement on the Web site.

Within hours of the government move, the Samson holding company, which held a 41 percent stake in Landsbanki, went to the district court seeking temporary protection from its creditors.

Iceland's central bank said in a statement that it had been informed by the Russian ambassador, Victor I. Tatarintsev, that Iceland would be given a loan of 4 billion euros ($5.4 billion), and that this had been confirmed by Prime Minister Vladimir Putin.