Thursday, October 09, 2008

Six Scottish Councils Had Funds Tied Up in Icelandic Bank

There have been six Scottish Councils revealed who may have lost money in failed Icelandic banks after control of Landsbanki was seized by the Icelandic government yesterday.

A £120million school refurbishment project In Aberdeen may be the worst hit as the funds for this were in Landsbanki*. South Lanarkshire had £7.5m invested there or in its its UK subsidiary Heritable, South Ayrshire had a further £5m, Moray £2m, and North Ayrshire an undisclosed amount. Perth and Kinross had already lost £1m which it had deposited with Glitnir.

With more of these councils being revealed all across the country and the size of the amounts there may well be futher calls on the Chancellor to come to the aid of local authorities who have lost out in some way.

*UPDATE Cllr Mark McDonald Deputy SNP group leader on Aberdeen City Council has posted clarification of their position in the comments. I'm only too pleased to update this report accordingly (as the BBC were not clear). Aberdeen City Council had not investing with Landsbanki but their private sector partners NYOP who were carrying out the 3Rs refurbishment scheme mentioned were borrowing the money from that source to carry out the work. Therefore the Council Tax payers of Aberdeen have not been affected directly, though the worry is who or when will complete this work on the schools .


Scott @ loveandgarbage said...

While having sympathy for the council tax payers in the local authorities - it should be noted that since, at the latest APril (and publicised in various media), it has been apparent that Icelandic banks were not in a good way. If money has been invested subsequent to that date - it smacks of a poor decision, and I am not sure how deserving the claim from the local authority is. If money was invested prior to that date, but in such a way that it could not be removed for a lengthy period which had not yet come to an end, then there are strong grounds for the local authorities seeking UK government support. But, if not so tied up - as Jon Snow asked the representative from the LGA on C4 news last night - why was it not removed between April and now?

And in a Scottish context (given the local SNP MSPs in some of these areas), stands the concordat where it did?

Mark McDonald said...


Not entirely accurate in our case. We don't actually have any money invested in Landsbanki, but they are lending money to NYOP, the council's private sector partner for the 3Rs project.

The council does not pay a penny until the schools are operational, so at present the financial implications for the council are not as dire as they might seem.

The situation is still troubling though, of that there is no doubt.

Stephen Glenn said...

I totally agree with you Scott. I think I avoided casting blame as I think every party across the UK is in some administration that has failed to heed the warnings, plus I'm also not fully aware of the terms of deposit for most of the amounts in question.

I believe that South Ayrshire where 1 and 2 months away from the end of their agreed terms for their deposits. As you say some of these investors while I heard the accusation used last night being 'informed investors' (on C4 I think) they were informed and depositing considerable sums, some of it spread and quite possible over long fixed term deals which may well have had horrendous early withdrawal clauses.

Stephen Glenn said...

Thanks for that clarification Mark the BBC report was not clear.


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