Iceland central bank snaps up $550 million

Crisis-stricken Iceland's central bank said Tuesday it has drawn more than a half-billion dollars from a swap facility set up with fellow Nordic nations to give it access to euros as it restarted trade on its buffeted stock exchange after a three-day halt, CNN reported.

The Nasdaq OMX was closed for three working days by the crisis.

Icelandic officials also began talks in Moscow on the terms of a hoped-for 4 billion euro ($5.5 billion) loan from Russia.

The OMX Iceland 15 index initially plunged more than 70 percent, but the index later recouped almost all those losses, which officials said were a statistical anomaly caused by the ongoing suspension in the trading of financial firms.

The index pared losses throughout the session, and finished down 5.8 percent at 683.49 euros.

Nasdaq OMX Iceland had halted equities trading for three days in a bid to prevent large falls on the exchange after a turbulent week where the government has taken control of the country's three major banks.

Supplies of foreign currency have also dried up as the Icelandic krona plummets in value, prompting the central bank, Sedlabanki, to call in its swap facility deal with the central banks of Denmark and Norway, tapping each for 200 million euros ($273.5 million). That works out to a total of 400 million euros ($546.8 million).

The swap facilities with Denmark, Norway and Sweden were announced in May and provide for euro-krona swaps of a maximum of 500 million euros ($684 million) with each country.

Sedlabanki also said Tuesday that negotiations were under way in Moscow between an Icelandic delegation and Russian officials about a "possible loan facility" from the Russian government. It said talks were expected to go on over the "next days."

Iceland has turned to Russia instead of the International Monetary Fund as it seeks support for its crumbling economy.

As rumors continued to abound about the health of Icelandic companies, major retailer Baugur Group Hf. said that it had no plans to put its British business into administration, denying reports that it had appointed advisers to review bankruptcy options.

"We continue to monitor the situation in Iceland, where possible maintain a dialogue with the banks and manage and plan our business accordingly," Baugur Group chief executive officer Gunnar Sigurdsson said in an emailed statement. "We have no plans to place our UK business into administration."

Britain's Daily Telegraph newspaper had reported earlier that Baugur, which owns a string of top British retail brands including Hamleys, Karen Millen and House of Fraser, had lined up advisers to prepare for restructuring and possibly even administration.

British retail magnate Philip Green said over the weekend he was in talks to buy up to ?2 billion ($3.4 billion) of debt held by Baugur.

Companies related to Baugur employ some 53,000 people worldwide and have a total turnover of ?5 billion.

Iceland has been hit particularly hard by the global credit squeeze because of its heavyweight banking sector.

Its troubles are also having repercussions elsewhere in Europe where tens of thousands of private savers have accounts worth millions of pounds with branches or subsidiaries of those banks.

The Icelandic exchange on Tuesday terminated the membership of Landsbanki, which went into receivership last week. It switched the listing over to New Landsbanki, the institution that was created out of the old bank's domestic operations.

The collapse of Landsbanki led to a political spat between Iceland and Britain, where thousands of individuals and scores of local governments have accounts in Icesave, the online unit of the bank.

Britain last week angered Iceland by using anti-terrorist laws to freeze the assets of Landsbanki.

After talks between the two sides, Britain said on Monday that it will lend Landsbanki 100 million pounds ($172 million) to help ensure that British creditors of the collapsed bank get their money back. The loan is secured against the frozen assets.

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