Iceland crisis: Scottish council reaction

More than �45m of Scottish taxpayers' money may be at risk as a result of the Icelandic banking crisis

Seven local authorities have investments in the country's troubled financial institutions, while one has borrowed money.

Here, the local authorities give their reaction to being drawn into the global financial crisis.

A spokesman said the authority was expecting support from the UK Government.

Council deputy leader Neil Calvert and director of corporate resources John Campbell said in a joint statement: "Scottish Borders Council has operated within all the rules relating to the deposit of council funds.

"At the time of the deposits, the two banks [Landsbanki and Heritable] were both authorised by the FSA to take deposits in the UK, and both had high credit ratings."

A spokesman said: "The council has made representations to the Treasury for an assurance that short-term deposits made with Landsbanki Bank and Heritable Bank will be covered by the Chancellor's promises over deposits with Icelandic Banks.

"The council is also pursuing this through the Convention of Scottish Local Authorities (Cosla).

"It is important to stress that the deposits are not lost."

A spokesman said: "Due to our robust Treasury management strategy and varied banking arrangements, this is presently considered to be both minimal and controllable, although clearly the situation remains fluid."

Chief executive David Anderson said: "The rapid change of circumstance in relation to this bank [Landsbanki] is a result of the challenges facing global banking and could not have been predicted.

"We will continue to monitor the position and will continue to seek advice from our Treasury advisers."

Finance committee chairman Allan Wright said: "First and foremost, this will have no impact whatsoever on the services delivered to the people of Moray by the council.

"Secondly, there will be no impact on the jobs of council staff."

He added: "We have been advised that the Landsbanki group is not holding any 'toxic' debt and there is likely to be full repayment at a future date."

A spokeswoman said: "We make decisions on where to deposit funding only after taking advice from recognised industry-wide independent financial experts.

"We have a short-term investment of �1m with Icelandic bank, Glitnir. We will continue to keep this situation under review.

"We can reassure the people of Perth and Kinross that there will be no impact on council services or on council tax levels from this situation."

Director of finance Norie Williamson said: "We made the decision some months ago to invest only in UK or Irish-based banks withdrawing, where possible, any investment in Icelandic associated banks.

"But a previous investment in Heritable as a UK-domiciled, and, at that time, a bank with a sound credit rating, could not be renegotiated given the terms of the deposit.

"That �1m investment is due to mature in early December. We are in touch with the administrators and hope in the longer-term, once the bank's and the government's positions clarify, that we will, as with other councils, be able to recover this investment."

Council deputy leader Kevin Stewart said: "We see in the news what governments around the world are doing to bring stability back to the financial sector - but at a local level the council is doing everything it can to minimise the impact."

E-mail this to a friend

Printable version