Scramble to save banks as IMF warns of meltdown

Rich nations rushed to shore up the global financial system after the International Monetary Fund warned of meltdown, with Australia and New Zealand guaranteeing bank deposits and newspapers reporting plans for Britain’s biggest retail bank rescue.

The International Monetary Fund said it backed a Group of Seven plan to try to stabilize markets and urged “exceptional vigilance, coordination and readiness to take bold action” to contain a firestorm that pushed global stocks to five-year lows.

Under the Australian plan, all deposits in the country’s banks, building societies and credit unions, would be guaranteed by the Australian government for the next three years, Australian Prime Minister Kevin Rudd told reporters.

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The government would also guarantee term wholesale funding to local banks until global financial markets stabilized.

In the UK, the Sunday Times newspaper said Britain will launch its biggest retail bank rescue on Monday when the four largest, HBOS, Royal Bank of Scotland, Lloyds TSB and Barclays, ask for a combined 35 billion pound ($60.5 billion) lifeline.

France promised that a meeting of European leaders in Paris on Sunday will detail measures to keep a market panic from triggering the most severe global downturn in decades.

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