TIMELINE-Key events since Iceland's financial meltdown

Thu Dec 31, 2009 11:38am EST

Dec 31 (Reuters) - Iceland's parliament approved an amended bill to repay more than $5 billion lost by savers in Britain and the Netherlands when the island's banks collapsed during the financial crisis.

Here is a timeline of events since Iceland's financial meltdown.

Oct. 6, 2008 - Threatened with national bankruptcy, Icelanders give the government sweeping powers, including wide-ranging authority over its banks.

Oct. 7 - The government dismisses the board of directors of Landsbanki, the island's second largest bank by value, and puts the bank in receivership.

Oct. 8 - The government takes control of Glitnir, the third-largest bank, buying a 75 percent stake for 600 million euros ($878 million).

Oct. 9 - The financial crisis deepens as Iceland also takes control of Kaupthing, its biggest bank.

-- A diplomatic row breaks out between Iceland and Britain over how to deal with hundreds of millions of pounds of British deposits trapped in collapsed Icelandic banks.

Oct. 15 - Iceland shores up its ravaged economy by slashing borrowing costs; the central bank cuts its main interest rate to 12 percent from 15.5 percent.

Oct. 24 - Iceland asks the IMF for $2 billion in aid to help fix the economy and restart currency trading.

Oct. 25 - Protesters demand the resignation of conservative Prime Minister Haarde.

Oct. 28 - The government raises interest rates by a massive 6 percentage points to 18 percent, a surprise move that aims to please the IMF and restore trust in the shattered currency.

Nov. 19 - The IMF approves a $2.1 billion loan for Iceland. The deal is complemented by more than $3 billion in loans from Nordic countries, Russia and Poland and around $5 billion from Britain, the Netherlands and Germany, making the whole package worth about $10 billion.

Dec. 2 - The government announces debt relief and investment measures for its ailing business sector and says it will settle debts with foreign creditors by offering stakes in the new Icelandic banks.

Jan. 26, 2009 - Iceland's ruling coalition falls apart when Prime Minister Haarde says he is resigning. Two days later the Social Democrats are given a mandate to form a new government.

Feb. 1 - Iceland names an interim centre-left government which promises to rebuild the economy. Johanna Sigurdardottir of the Social Democratic Alliance is prime minister. The Social Democrats, the junior partner in the previous government, forms the caretaker administration with the Left-Greens.

April 25 - The caretaker government of the Social Democrats and Left-Greens win renewed power in parliamentary elections.

June 6 - Iceland agrees to reimburse Britain and the Netherlands compensating people holding Icesave accounts at Landsbanki.

June 29 - Parliament approves a government plan to raise taxes and slash spending to tackle a ballooning budget deficit.

July 17 - Iceland applies to join the EU a day after parliament narrowly backed government plans to begin talks on joining.

Aug. 28 - Parliament approves "Icesave" bill, having added conditions such as linking payment to GDP development. The revisions will need the approval of the governments of Britain and the Netherlands.

Oct. 18 - Agrees to a new deal to repay Britain and the Netherlands, paving the way for new aid from international lenders.

Dec. 30 - Parliament approves an amended bill to repay more than $5 billion lost by savers in Britain and the Netherlands.

Sources; Reuters/www.iceland.org

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