Council counts cost of Icelandic investments

CRISIS talks were taking place today after it was revealed Nottingham City Council has invested in troubled Icelandic banks.

Deputy leader of the city council, Coun Graham Chapman, met with finance chiefs to discuss the potential impact on taxpayers.

As the Post went to press, the council had not confirmed the amount it has invested.

But it is known the council has around £200m spread across 25 different financial institutions.

A spokesman for the city council only said: "We have money invested in Icelandic banks."

Nottingham is one of more than 20 councils which are believed to have deposits in Icelandic institutions.

Landbanksi or Heritable, the firm's UK bank, is a high-profile victim of the global financial crisis. It was taken over by the Icelandic government on Tuesday.

Kent County Council has £50m invested.

In Notts, Bassetlaw District Council confirmed it has a "significant" sum invested with Icelandic banks and a statement will be issued later today.

Mansfield District Council,

Gedling Borough Council, Rushcliffe Borough Council, Broxtowe Borough Council and Notts County Council, have confirmed they have no investments in Icelandic banks.

Nobody was available to comment at Newark and Sherwood District Council.

All councils are required by the Government to have an investment strategy.

They can only invest in institutions approved by the Government.

The finance officers at Nottingham City Council were recently praised by councillors for generating additional income this year through the authority's investment strategy.

Since the start of the financial year, they have generated about £1m for the authority through short-term lending.

The council has made more money than expected because the interest paid for short-term loans on the money markets has increased as banks have become wary of lending to each other.

The council lends money overnight and for periods up to six months. It is presently investing with 13 banks and 12 building societies.

Between April and August this year, it had £175m invested.

Last year, the city council made investments of about £1bn.

While Nottingham officers discuss the implications of their lending, the Local Government Association is calling on the Government to cover any losses.

Coun Margaret Eaton, chairman of the Local Government Association, said: "We are today seeking an assurance from the Chancellor that councils' assets will be protected in the same way as personal assets. Town halls invested in Landsbanki as a reputable bank with a solid credit rating."

Ministers are to hold talks later today with local government leaders about the hundreds of millions of pounds invested by British local authorities in Icelandic banks.

With councils warning the money could now be at risk, Treasury Financial Secretary Stephen Timms said Treasury ministers would be meeting with the Local Government Association this afternoon.

Nottingham City Council said it will brief the media at 3.30pm.

Confirmed Deposits in Icelandic Banks: Kent County Council, £50m; Transport for London, £40m; Westminster City Council, £17m; Hertfordshire County Council, £17m; Havering Council, £12.5m; Cheltenham Council, £11m; North Lincolnshire Council: Sutton Council, £5.5m; Buckinghamshire County Council: Cornwall County Council, £5m; Powys Council, £4m; Flintshire Council, £3.7m; Rhondda Council, £3m; North East Lincolnshire Council, £2.5m; Gloucester Council, £2m; Monmouthshire Council, £1.2m; Tewkesbury Council, £1m.