Town hall chiefs have called for calm despite the question mark over tens of millions of pounds of Kent taxpayers’ money in crisis-hit Icelandic banks.
Kent County Council currently has £50 million frozen by the Icelandic government following the collapse of the nation’s banking system, with no guarantee yet that the money will be protected.
Five other of the county’s local councils have another £14m of funds at risk.
And in an interesting twist, bosses at Dartford and Thanet – which do not have money in Iceland – revealed they knew of the dangers before this week.
Cllr Martin Wise, Thanet’s cabinet member for finance, said: “Investment of funds has been a challenging area for the council over recent weeks and months, especially with the rapidly-changing global situation.
“It is down to the diligent work of our
officers, who are continually monitoring
our investments, that the money we did have invested with Icelandic banks was withdrawn a few weeks ago.”
And a spokesman for Dartford Borough Council said: “The vulnerability of Icelandic banks has been highlighted by our advisers for the last two years.”
Chancellor Alistair Darling announced this week that all UK savers affected by the Icelandic bank crisis would be protected, but the same has not yet been offered for more than £900m known to have been invested by councils, police and transport authorities.
A delegation of Treasury officials was due to meet with officials in the country yesterday to discuss the way forward.
KCC leader Cllr Paul Carter said that despite £50 million being at risk, the council did not have a liquidity problem and that services, salaries and pensions would not be hit.
He added: “The advice from the Independent Financial Rating Bodies was that these banks were a safe investment option. KCC has operated within all the rules relating to the deposit of council funds, and full risk assessments were carried out.
“The money – a total of £50m out of a KCC budget of £2.6bn and pension fund of £2bn – is deposited in three banks. These are Glitnir (£15m), Landsbanki (£17m) and the Heritable Bank (£18m).
“As stated, KCC does not have a liquidity problem.
“We are supporting the Local Government Association (LGA) in its discussion with Central Government to seek a solution in protecting the local government family with regard to these investments.”
A Kent Police Authority spokeswoman said there were also no short-term liquidity problems for the force, as the £11.1m it had invested in Icelandic banks represented a “small proportion of our total assets”.
That figure forms part of KCC’s £50m total.
The only local councils with money at risk were Canterbury (£6m), Bromley (£5m) and Tonbridge and Malling, Dover and Sevenoaks (£1m each).
The LGA, in a joint statement with the Government, said there had been “no evidence of recklessness” by local authorities investing in Icelandic banks.
It continued: “The financial framework for local authorities, which requires them to strike an appropriate balance between security of investments and returns, appears to have been adhered to.
“It has been agreed that once the LGA has completed its analysis of the effects
of the situation on individual local authorities, we will look at issues arising on a case-by-case basis.”
POSTED: 11/10/2008 06:00:00
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