Still little sign of council cash from Iceland investments
Special report by political editor Paul
Francis
Councils in Kent who invested millions of pounds in Iceland have
received only a fraction of their money back one year on from the
banking crisis that hit the country.
Of the £63million tied up with the three banks by five
authorities and the Kent Police Authority, a little over £4million
has been returned since last October and it could be several years
before the bulk is recovered as protracted wrangling over whether
councils should get priority have yet to be resolved.
The largest sum has come back to Kent County Council, which has
secured £3 million of the total of £50 million it had on
deposit.
Canterbury City
Council has also received some money back but the £673,871 returned
still leaves a further £5.3million outstanding.
Three other councils - Sevenoaks, Dover and Tonbridge and
Malling - who each had £1million on deposit have yet to see a penny
back from any of the banks.
Kent Police Authority, which had £11.1million on deposit that
was invested on its behalf by KCC, has seen £516,000 of its money
come back and is forecasting that it will eventually recover
£9.5million, a loss of £1.6million.
KCC said it remained optimistic the bulk of its money would in
time be returned but based on current predictions has estimated it
could eventually have to write off about £5million.
Cllr John Simmonds (Con), KCC cabinet member for finance, said:
“We have no reason to be any less optimistic than we were at the
time we said we could get between 85 and 95 per cent of the money.
Of course we would hope for no losses but that would be
unrealistic.”
The authority is poised to move back into the money markets
after a year placing all its investments in the Government’s Debt
Management Board, which has been paying a much lower rate of
interest.
Cllr Simmonds said: “The important message is that no
frontline services have been affected. We are lucky because we are
a large authority.”
Why the wait? Read Paul Francis' blog on
the Icelandic crisis>>>
Tonbridge and Malling council said it was less clear now whether
initial predictions that it would recover 95 per cent of the
£1million invested in Landsbanki would be fufilled.
Finance director Sharon Shelton said: “We are unlikely to have a
reliable feel for the amount until after the Icelandic winding-up
committee for Landsbanki meets later this year. More recent
updates have suggested the likely return could be slightly less
than this earlier advice.”
The issue of whether the council would be treated as a preferred
creditor - meaning it would get priority when money is returned -
had not been resolved, she added.
“As we understand it, the issue of whether or not councils will
benefit from preferred creditor status is still being tested so it
is difficult to speculate at this stage [what the returns will
be.]”
Canterbury City Council said it expected to receive 80 per cent
of the £4million it had deposited with the UK-based Heritable Bank,
a subsidiary of Landsbanki.
It has already received a payment of £673,971 but says it does
not expect any repayments from the £2million deposited with Glitnir
until next summer at the earliest.
Council leader Cllr John Gilbey said: “We have remained
confident since the start that we would get back the majority of
the money invested in Icelandic banks.”
Sevenoaks said it anticipated getting back 85 per cent of its
£1million deposit in Landsbanki but that repayments were likely to
be spread over three years.
Friday, October 02 2009