Nationalisations and rescues stepped up in finance debacle

PARIS, October 7, 2008 (AFP) – The EU moved to increase support for big banks as the international finance chaos deepened Tuesday, with Russia setting up a huge rescue package for its banks and markets again panicking.

Russia was also to negotiate a four billion euro (5.4 billion dollar) emergency loan to Iceland, which is battling against the whole country going bankrupt and nationalised its second biggest bank.

While European banks frantically sought dollars at exorbitant interest rates, an emergency meeting of EU finance ministers agreed to coordinate their responses to the financial crisis.

The ministers also agreed to increase a bank deposit guarantee ceiling to 50,000 euros from 30,000-euros — still short of earlier expectations of a 100,000 euro savings guarantee.

Iceland, its banks frozen by debt and the credit crunch, nationalised Landsbanki and gave its biggest bank Kaupthing a 500-million-euro (678-million-dollar) loan. Glitnir bank, the third largest, was nationalised last week.

In Russia, President Dmitry Medvedev promised up to 36 billion dollars in credit to support its banks, telling an emergency meeting of ministers and bankers that loans could last for up to five years