Published: Wednesday, 15th October, 2008 12:30
£15m disappears from council coffers
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The leader of North Ayrshire Council has admitted that council tax hikes could now take place after it was revealed that an Icelandic bank crisis could swallow £15m of our money.
NAC is one of eight Scottish councils who face losing £45m invested in Iceland’s top three banks.
The turmoil arose when the Icelandic government stopped trading in the banks because share prices had collapsed, forcing them to freeze their accounts to stop them going out of business.
However, NAC were forced to admit that their total of £15m of deposits invested with the Landsbanki (£5m) and Glitnir Bank (£10m) was the highest potential loss of any individual council.
It has also been claimed that, despite warnings of falling credit ratings taking place at the banks earlier this year, NAC made no attempt to address the situation.
However, council officials say that the collapse could not have been predicted, and are doing everything possible to recoup the cash.
In a statement this week, the council Labour leader David O’Neill said: “These deposits were taken out within the last 12 months and were made in accordance with the Council’s approved investment strategy.
“At the time of investment these banks provided a good return at minimum risk – illustrated by the £800m of exposure by UK local authorities.”
He added: “At this stage, no council services are affected by this issue. Discussions are ongoing at Scottish and UK government level to pursue a guaranteed return of the investment.
“In terms of potential council tax increases and effects on the communities of North Ayrshire, whilst no detrimental impact is envisaged at this time, the matter is being closely monitored.”
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