FACTBOX: Governments struggle with financial crisis

(Reuters) - Iceland took over its second largest bank on Tuesday and Russia announced an aid package for banks, seeking to limit damage from the global financial crisis.

Following are measures taken by national governments around the world on Tuesday:

ICELAND

Iceland used emergency powers adopted on Monday to dismiss the board of directors of Landsbanki, the island's second largest bank by value, and put the bank in receivership, a minister told state radio.

Battling to stave off national bankruptcy, Iceland also said Russia had agreed to provide it with a 4 billion euro loan. But Russia's deputy finance minister said no decision had been made.

The central bank said it was pegging the crown to a basket of currencies at a level of 131 crown per euro, saying the move was taken to make its interbank market function. The crown has been in freefall for days as a result of a crisis in the financial system.

Iceland has already part-nationalized its number-three bank Glitnir and passed new legislation to give the government sweeping powers over the banking sector.

BRITAIN

The British government held talks with major banks on Monday evening at which the possibility of an injection of public money was discussed, according to a source familiar with the talks.

Shares in some of Britain's biggest high street banks tumbled on news of the talks. Media reports said Royal Bank of Scotland, Lloyds TSB and Barclays were seeking 15 billion pounds ($26 billion) each.

The UK Treasury declined to comment, but said it would do whatever was necessary to maintain stability.

RUSSIA

Russia will lend 950 billion rubles ($37 billion) in subordinated loans to key banks, President Dmitry Medvedev said after meeting bankers to discuss what he called a "large scale financial crisis".

Medvedev said the money could be split, with lending giant Sberbank getting up to 500 billion rubles, another state-owned banking major VTB receiving 200 billion rubles, and the rest split between smaller players.

The comments boosted Russian bourses, with the MICEX index adding 5.5 percent and RTS up 4 percent. The index lost 18 percent on Monday.

EUROPEAN UNION

EU finance ministers were debating a sizeable hike in minimum levels of bank deposit insurance across the 27 European Union countries.

Irish Finance Minister Brian Lenihan, in the dog-house with some European partners after Dublin unilaterally took radical steps to stabilize Irish banks, said a figure of 100,000 euros ($135,900) was an option, compared to minimum now of 20,000.

AUSTRALIA

Australia's central bank stunned investors with its biggest interest rate cut in 16 years -- a 100 basis points cut in its benchmark cash rate to 6.0 percent.

The bank said the reduction -- twice the size analysts had expected -- was justified by a severe deterioration in the outlook for global growth, combined with a sharp rise in funding costs for banks.

The aggressive move sparked talk that this might be the prelude to a round of coordinated cuts by other central banks.

NETHERLANDS

The Dutch central bank said a court has decided to freeze all assets and liabilities of Indonesische Overzeese Bank NV (Indover), a unit of Bank Indonesia. IT said the court had appointed two administrators for Indover.

FRANCE

President Nicolas Sarkozy told his cabinet France was prepared to help French banks by acquiring a stake in their capital if necessary.

A government spokesman said Sarkozy told a weekly cabinet meeting he would not let French banks down and was prepared to help those that ran into difficulty "through a participation in the capital" of those banks.

Japan's Nikkei business daily said France has made a formal proposal to Japan and other Group of Eight (G8) countries to hold an emergency G8 summit meeting to deal with the financial crisis.

(compiled by Dominic Evans; edited by Janet McBride)