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Iceland on the brink as governments shore up banks

Iceland on the brink as governments shore up banks
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The Prime Minister of Iceland has warned his country could go bankrupt, as the government has moved to take control of the country’s largest bank, in addition to the two other major banks which were nationalised earlier this week.

Iceland’s stock market has also been shut. The government is seeking a four billion euro loan from Russia. There was financial intervention too from the leaders of Belgium, France and Luxembourg.

They have agreed to guarantee any loans taken out by the Dexia banking group, initially for a month but the shore-up plan could be extended for a year. The Belgian Prime Minister, Yves Leterme, suggested other Belgian banks could benefit too.

But not all banks in Belgium are suffering as savers look for a bolthole. The Triodos Bank is cashing in. It has traditionally concentrated on relatively risk-free investments. “What we do is invest in the real economy. We finance ecological buildings, we finance windmills, we finance cultural projects,” said the Director of Triodos, Olivier Marquet. “We don’t invest in mortgage bonds wrapped in obligation nor in purely virtual products.”

Triodos says it has been opening about 70 new accounts a day, with most people attracted as much by the focus on ethical projects as the low-risk banking strategy.