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KCC defends investments in troubled bank Dexia

by political editor Paul Francis

County Hall, Maidstone
County Hall, Maidstone

Kent County Council says it is confident there is no risk to £10m it has on deposit with a Belgian bank caught up in the Eurozone financial crisis.

The council has £10m on deposit with the troubled bank Dexia, which has seen share prices fall in recent days because of its exposure to Greek debts.

The KCC money invested in a long-term deal several years ago when the bank was well rated. The deal finishes at the end of the month.

County Hall finance chiefs say that the money is secure as it renegotiated the terms in 2009 which means the money would be guaranteed by the French and Belgian governments in the event anything happened to the bank.

However, the terms of that renegotiation meant that the council forfeited an interest rate of about 5% for one of less than 1%.

The governments of France and Belgium, who are joint shareholders in Dexia, moved to guarantee its debts this week.

Cllr John Simmonds (Con), KCC’s cabinet member for finance, said: "We are about as confident as we can be that our money is safe. Back in 2009, when there was global uncertainty, we took up an offer from the Belgian and French governments who offered to guarantee the deposit although we sacrificed a good interest rate for a negligible one. It seemed sensible to do so at the time."

He added that the authority also had loans from Dexia totalling several million pounds but there was no risk to that money.

Meanwhile, KCC expects to hear within weeks whether it will recover the remaining £37m it had on deposit with Icelandic banks. The Icelandic Supreme Court is to make a final ruling on local authority investments which it is hoped will clear the way for the money that was on deposit to be returned.

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