The moves came a day after trading in shares of major banks was suspended, the Icelandic krona lost a quarter of its value against the euro, and the government rushed through emergency legislation giving it new powers to deal with the financial meltdown.
"As declared by the government, all domestic deposits are fully guaranteed," the Financial Supervisory Authority said. "Landsbanki's domestic branches, call centers, cash machines and Internet operations will be open for business as usual."
The Russian loan supports the government's efforts to gain control of an increasingly dire financial situation, which saw the government coming to rescue of the third-largest bank, Glitnir, last week.
Prime
