Good news from Iceland

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Good news from Iceland

Cheltenham Borough Council has received encouraging news about the recovery of its investments in Icelandic banks.

The Charted Institute of Public Finance and Accountancy (CIPFA) Local Authority Accounting Panel (LAAP) have issued guidance to councils for the treatment of outstanding deposits in the banks. Their guidance suggests that the likelihood of recovery for Glitnir Bank (in which the Council has a 3m deposit) is 100% ; Landsbanki (5m) is 90-100%; and Kaupthing Singer & Friedlander (3m) at least 50%. Indications are that the money will be recovered over a period of time, but some payments are likely in the current 2009/10 financial year.

The council's chief finance officer, Mark Sheldon said: 'The council and the Local Government Association have been working hard to establish priority creditor status for local authorities under Icelandic law, which, if successful, could mean that a very high proportion of our money is likely to be recovered from the two banks - Glitnir and Landsbanki - that come under Icelandic law.

'Our aim in dealing with this banking crisis has been to stop it impacting on the level of council tax and local services. We have succeeded in doing this in the short term, and we are now confident that we can do it in the long term.

'We realise that it will be may be some months or even years before everything is repaid, but we have strengthened our general reserves specifically so that we can cope with any delay. We are also hopeful that any loss will be offset by an improvement in the performance of our other investments when the British economy comes out of recession.

We have always maintained that we would expect to recover the majority of its investments held in Icelandic institutions and the guidance from CIPFA reinforces this position.'

Posted : 21/05/2009 00:12:58

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