LUXEMBOURG/BRUSSELS, Oct 17 (Reuters) - The Luxembourg and Belgian governments said on Friday they would help Iceland's biggest bank, Kaupthing, out of trouble to guarantee the deposits of Belgian savers and preserve trust in Luxembourg's financial centre.
'With regard to Kaupthing Bank and its Belgian branch, the Luxembourg government is looking for a solution with the Belgian government,' Luxembourg Budget Minister Luc Frieden told reporters.
'Together with the Belgian and Icelandic governments, we are looking into to what extent the activity of Kaupthing Bank Luxembourg and its Belgian branch can be put in a situation where a taker could be found,' he added.
A spokesman for Belgian Prime Minister Yves Leterme also said the Belgian government had agreed in principle to help Iceland's biggest lender.
'All scenarios are open ... the government has agreed to ensure continuity in the bank and is interested in becoming engaged,' the spokesman said.
Possible scenarios include taking a stake in Kaupthing or its Luxembourg subsidiary, as well as providing state guarantees.
Frieden said, however, it was 'not the Luxembourg government's intention' to nationalise Kaupthing Bank Luxembourg.
Kaupthing was taken over last week by the government of Iceland, whose main lenders in recent years took on huge debts that have brought down the banking system and made the local currency virtually untradeable amid a global financial crisis.
Thousands of account holders have been unable to withdraw their money.
In Belgium, thousands of customers of Kaupthing's local branches fear for their savings, but the Belgian government has said it will make sure depositors get their money back.
Leterme was on his way to Iceland and would meet his Icelandic counterpart Geir Haarde to discuss possible solutions for Kaupthing, the Belgian prime minister's spokesman said.
Leterme was to seek more information on what the Luxembourg and Iceland governments planned to do and look into how the Belgian government could help through an intervention by the International Monetary Fund.
In an interview with the Luxemburger Wort newspaper published on Friday, Luxembourg Prime Minister Jean-Claude Juncker said: 'If people in Belgium got the impression that the Luxembourg government only supports banks that manage the savings of Luxembourgers, that would be a death blow to Luxembourg as a financial centre.'
The Luxembourg branch of Kaupthing was the parent company of its Belgian subsidiaries, and Luxembourg had a duty to help protect Belgian savers, Juncker said.
(Reporting by Paul Taylor, Antonia van de Velde, Michele Sinner
and Philip Blenkinsop, editing by Dale Hudson) Keywords: FINANCIAL/ICELAND JUNCKER tf.TFN-Europe_newsdesk@thomsonreuters.com cmr COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.
'With regard to Kaupthing Bank and its Belgian branch, the Luxembourg government is looking for a solution with the Belgian government,' Luxembourg Budget Minister Luc Frieden told reporters.
'Together with the Belgian and Icelandic governments, we are looking into to what extent the activity of Kaupthing Bank Luxembourg and its Belgian branch can be put in a situation where a taker could be found,' he added.
A spokesman for Belgian Prime Minister Yves Leterme also said the Belgian government had agreed in principle to help Iceland's biggest lender.
'All scenarios are open ... the government has agreed to ensure continuity in the bank and is interested in becoming engaged,' the spokesman said.
Possible scenarios include taking a stake in Kaupthing or its Luxembourg subsidiary, as well as providing state guarantees.
Frieden said, however, it was 'not the Luxembourg government's intention' to nationalise Kaupthing Bank Luxembourg.
Kaupthing was taken over last week by the government of Iceland, whose main lenders in recent years took on huge debts that have brought down the banking system and made the local currency virtually untradeable amid a global financial crisis.
Thousands of account holders have been unable to withdraw their money.
In Belgium, thousands of customers of Kaupthing's local branches fear for their savings, but the Belgian government has said it will make sure depositors get their money back.
Leterme was on his way to Iceland and would meet his Icelandic counterpart Geir Haarde to discuss possible solutions for Kaupthing, the Belgian prime minister's spokesman said.
Leterme was to seek more information on what the Luxembourg and Iceland governments planned to do and look into how the Belgian government could help through an intervention by the International Monetary Fund.
In an interview with the Luxemburger Wort newspaper published on Friday, Luxembourg Prime Minister Jean-Claude Juncker said: 'If people in Belgium got the impression that the Luxembourg government only supports banks that manage the savings of Luxembourgers, that would be a death blow to Luxembourg as a financial centre.'
The Luxembourg branch of Kaupthing was the parent company of its Belgian subsidiaries, and Luxembourg had a duty to help protect Belgian savers, Juncker said.
(Reporting by Paul Taylor, Antonia van de Velde, Michele Sinner
and Philip Blenkinsop, editing by Dale Hudson) Keywords: FINANCIAL/ICELAND JUNCKER tf.TFN-Europe_newsdesk@thomsonreuters.com cmr COPYRIGHT Copyright Thomson Financial News Limited 2008. All rights reserved. The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.