Iceland's financial watchdog said today it was taking control of the country's biggest bank Kaupthing, the third such takeover in a week, in order to safeguard the domestic banking system.
As the island nation struggled to cope with the global financial crisis that has claimed several of the world's biggest banks, Iceland's Financial Supervisory Authority (FME) said on its website that domestic deposits at the bank were fully guaranteed.
"The Icelandic Financial Supervisory Authority has under powers granted by the Icelandic Parliament proceeded to take control of Kaupthing," the authority said.
"The action taken by the FME is a necessary first step in achieving the objectives of the Icelandic Government and Parliament to ensure the continued orderly operation of domestic banking and the safety of domestic deposits."
The action by Iceland's financial regulator means that authorities have now seized control of all three of the nation's major banks. Landsbanki and Glitnir were taken over earlier this week.
The British Treasury said yesterday that a Kaupthing unit in Britain had been put into administration to protect retail depositors, while the Swedish central bank agreed to provide a loan to the bank's Swedish arm to help it meet a liquidity crunch.
The Icelandic Financial Supervisory Authority said all Kaupthing's domestic branches, call centres, cash machines (ATMs) and Internet operations would be open for business as usual.
Reuters