Ailing Iceland banks say no run on deposits yet

By Brett Young

REYKJAVIK (Reuters) - An uneasy calm settled over Iceland's ailing banks on Friday, with some nervous Icelanders snapping up foreign currency while others, equally nervous, left their deposits untouched.

Prime Minister Geir Haarde on Thursday urged people not to panic and try to withdraw large sums of money as that would cause further difficulties.

The government has seized control of three of Iceland's biggest banks -- Kaupthing, Landsbanki and Glitnir -- this week and has guaranteed deposits.

Kaupthing and Glitnir have daily deposit withdrawal limits of 500,000 crowns, and 50,000 crowns for foreign exchange transations, and said the situation was calm. Landsbanki was not immediately available for comment.

"There is definitely not any run on Glitnir," bank spokesman Mar Masson said. "We have not seen any increase when it comes to a withdrawal of deposits."

Kaupthing spokesman Benedikt Sigurdsson said: "There is a (100 pct) state guarantee for deposits, so there is no reason for people to run to banks and take out money.

In Reykjavik, some bank branches saw heavy traffic.

"I don't know exactly what to think," said Ragnheidur Osp Sigurdardottir as she walked into the Landsbanki main branch.

"I am keeping my money in the bank because I've heard that if all the people take out their money, everything will go crazy," she said.

Einar Sigurbergsson, a slim man in his 30s, was not taking any chances. While in Stockholm on Thursday he said he took out as many Swedish crowns as he could, and on Friday he was snapping up foreign currency from different bank branches.

He said he was told the Landsbanki branch had run out of dollars and euros.

"I saw people in Kaupthing buying currency, and one guy here (at Landsbanki) probably took out a couple of million kronors, put them in a bag and walked away. I guess it's pretty disastrous," he said.

"I could see from the way the cashier told me that they were out of currency that something is wrong. This doesn't happen in a normal situation."

Others took a more fatalistic approach.

"If I had any money, I probably would take it out, but I don't think it would matter because the kroner is going down, so even if you take it out it would be worthless in a while," said student Thorir Ingvarsson outside a Glitnir bank branch.

(Editing by Philippa Fletcher)