Wakefield Council's £9m Icelandic bank admission

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Wakefield Council's £9m Icelandic bank admission

Oct 13, 2008

By Nigel Scott
WAKEFIELD Council has admitted it has £9m invested in struggling Icelandic banks.

Fears are growing that some local authorities could be forced to increase council tax or cut local services if they lose money invested in Iceland, whose banks have been hit hard by the worldwide economic crisis.

Wakefield Council chief executive, Joanne Roney, said front-line services would not be "immediately" affected.

She added: "These are exceptional times for the financial sector world-wide and we are currently assessing the impact on services of the recent developments with Icelandic banks.

"Wakefield Council has £9m with Icelandic banks which was invested at a time when their credit ratings were highly ranked and there was no suggestion of any risk.

"It is normal practice for the public sector to hold deposits in overseas banks. We are working with the district's MPs to resolve the situation."

She said all investments had been made in accordance with strict guidance and procedures laid down for local government finance management.

Council tax payers in Leeds have been assured that the local authority has no investments in Icelandic banks.

A North Yorkshire County Council spokesman also confirmed that the authority had no financial deposits in Icelandic banks.

However Kirklees Council admitted it has £1m invested in Iceland.

Coun Andrew Palfreeman, Kirklees Council's cabinet member for finance and governance, said: "Kirklees Council has one million pounds invested in Landsbanki which is due to be repaid in January 2009.

He added: "The Icelandic government has said the bank will run as normal so we expect the investment to be repaid and will be working to secure this."

Across the UK, hundreds of millions of pounds invested by local authorities may be at risk. One authority - Kent County Council - has £50m deposited in Icelandic banks, while more than 20 others are thought to have exposure running into millions of pounds.

Edward Welsh, of the Local Government Association (LGA), insisted councils acted along "prudent lines" by spreading their money across several financial institutions at home and abroad. But he admitted the money was now "at risk".

The LGA has called on the Government to guarantee them against any losses.

Chancellor Alistair Darling announced on Wednesday that he will protect the savings of private investors in Icelandic banks but said local authorities were "more of an informed investor".

"But this situation is evolving, we are trying to sort the matter out with the Icelandic government," he said

Source: Yorkshire Evening Post

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