Riksbank pumps Skr5 billion into Icelandic bank

The Riksbank on Wednesday agreed to prop up Kaupthing, Iceland's largest lender, with a Skr5 billion ($700m) loan, on fears the bank's liquidity problems threatened the stability of the Swedish financial system.

The loan is made to Kaupthing Bank Sverige, the Icelandic lender's Swedish subsidiary, but can be used to pay depositors with accounts in Kaupthing Bank Iceland, as well as depositors and creditors of the Swedish wing.

"The Icelandic bank sector has for some time been under great

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