Iceland did not want to seek IMF help -G7 source

(This story has no dateline to protect the source's anonymity)

Oct 7 (Reuters) - Iceland rejected a proposal that it should use an International Monetary Fund facility to help it tackle its financial crisis, a government official from one of the Group of Seven leading industrial nations said on Tuesday.

The source said G7 deputy finance ministers discussed Iceland's situation during a conference call on Monday evening, the day before Iceland took over its second largest bank, propped up its battered currency and sought a 4 billion euro ($5.44 billion) loan from Russia.

"Japan proposed using an IMF facility to help Iceland, but Iceland did not want to ask the IMF for money," the official, who was familiar with the content of the phone consultations, said, speaking on condition of anonymity.

"Iceland does not want to be singled out as a country that needs IMF help. Even last summer, Iceland preferred to ask the central banks of some Nordic countries for help rather than go to the IMF for money," the official added.

The United States and Britain had exerted pressure on Iceland to seek IMF help, the official said, adding that a large amount of deposits in Icelandic banks were owned by British customers.

For story on the financial crisis that has engulfed Iceland, please click on [ID:nL7266189]