Fear for councils' Icelandic cash

At least 80 councils have cash in Icelandic banks

At least nine West Midlands councils and a police authority have deposited money in troubled Icelandic banks.

Wyre Forest council in Worcestershire invested �9m and Stoke-on-Trent City Council has �5m invested in one bank.

Solihull, Rugby and Nuneaton and Bedworth councils each invested �3m while East Staffordshire deposited �4m.

West Midlands Police Authority said it has deposited more than �5m, while Wychavon, Bridgnorth and Tamworth councils also have money invested.

Deposits from about 100 councils could be at risk, the BBC has learned.

'No recklessness'

Treasury ministers Stephen Timms and Ian Pearson and Local Government Minister John Healy held talks with the Local Government Association (LGA).

In a joint statement afterwards they said: "Government and the LGA agreed that there is no evidence of recklessness by local authorities."

They added: "We will judge what's appropriate on a case-by-case basis, but in previous situations support has included helping local authorities restructure their financial priorities, providing additional expertise and capitalisation of expenditure."

Gordon Brown said he was considering "further action", but the government was not offering to guarantee authorities' deposits with Icelandic banks.

Stoke-on-Trent, Wychavon, Nuneaton and Bedworth and Bridgnorth councils said their money was invested with Landsbanki.

Nuneaton and Bedworth said it had made three deposits of �1m with Landsbanki during the summer which were due to be returned in October and November.

'No risk'

Wychavon said it had invested �1.5m, while Bridgnorth has deposited �1m.

Rugby said �3m had been deposited in two Icelandic banks - �2m in Glitnir, due to mature next month, and �1m in Landsbanki.

East Staffordshire said it had �4m spread across the three affected banks.

Tamworth Borough Council in Staffordshire has not revealed how much it has deposited.

Both the LGA and the councils have said there is no risk to services.

The councils also said they had acted within strict guidelines, which had been designed to spread any risks.

Three of Iceland's banks, Landsbanki, Glitnir and Kaupthing, have been taken over by the country's government in the past few days.

E-mail this to a friend

Printable version