Meeting sought on bank collapse

Several Scottish councils have invested in Icelandic banks

Scottish council leaders are seeking a joint meeting with the Scottish and Westminster governments to discuss the the Iceland banking collapse.

Eight councils have more than �45m invested in Icelandic banks.

And a �120m project to build or refurbish Aberdeen schools is being funded by money from an Icelandic bank.

Finance Secretary John Swinney has sought assurances from the chancellor that all Scottish council deposits in Icelandic banks will be protected.

The UK Government has agreed that no council acted recklessly.

The eight Scottish local authorities confirmed they had investments in the country's troubled financial institutions including Landsbanki, Heritable and Glitnir.

AFFECTED SCOTTISH COUNCILS North Ayrshire: �15m invested Scottish Borders: �10m invested South Lanarkshire: �7.5m invested East Ayrshire: "Potential exposure" of between �3m and �5m South Ayrshire: �5m of deposits Moray: �2m of deposits Perth and Kinross: �1m of deposits East Renfrewshire: �1m invested Aberdeen City: "Icelandic involvement" in �120m schools project Scottish councils give their reaction What happened to Iceland? Icelandic compensation to start

However, the council said this is in the context of a �8bn to �9bn pension fund, and said pensioners should not panic.

Strathclyde Fire and Rescue Service also revealed it had �3m invested in Heritable.

Speaking after a meeting in Edinburgh between council leaders discuss the situation, Pat Watters, president of local authority umbrella body Cosla, said it was determined that Scottish councils voices would be heard in discussions with the Treasury.

"To this end, we are writing today to Alistair Darling requesting equal involvement to our English colleagues," said Mr Watters.

"We will also be seeking reassurance that the treatment of Scottish local government will be no different to that in the rest of the UK."

He said Cosla would also write to the Finance Secretary, John Swinney to ensure it was kept fully informed, and that it was fully represented at any meetings relating to the councils.

Meanwhile Mr Swinney has contacted all local authorities with deposits in Icelandic banks.

He said: "The Scottish Government stands ready to work co-operatively with Scottish councils whose investments in Icelandic banks may be in doubt, and I will take forward discussions with affected Scottish local authorities directly with the Treasury to ensure that council resources and council taxpayers' interests are protected at this time of uncertainty."

Spread investments

Labour finance spokesman Andy Kerr urged the UK Government to offer equal support to all councils across the country.

He said: "Whatever support is offered I expect assurances from the Treasury that there is no disparity between the way that Scottish local authorities are treated and those in the other parts of the UK."

Following the collapse of the BCCI bank in 1991, councils were obliged to spread their investments around. In that collapse, the Western Isles Council lost �23m.

The Scottish Office bailed the council out and the authority has since repaid all the money.

The discussion is now between the Scottish Government which has devolved responsibility for local councils and Westminster which retains responsibility for financial regulation.

There is also concern elsewhere about the impact of the collapse of Iceland's banks in the UK.

The umbrella body for voluntary organisations in Scotland, the Scottish Council for Voluntary Organisations (SCVO), said it was trying to assess how many members have been affected.

Lucy McTiernan the deputy head of the SCVO said: "We do know that it's very, very worrying because individual voluntary organisations can have their reserves completely wiped out by this crisis, which means they will really struggle to continue into the future."

The SCVO has asked to meet the Scottish secretary, Jim Murphy, to discuss ways of protecting the voluntary sector from the wider effects of the financial crisis.

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