Iceland cash frozen (From Free Press Series)

Iceland cash frozen

11:30am Friday 10th October 2008

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MONMOUTHSHIRE County Council and the Gwent Police Authority have had their £2.2million investment in the troubled Icelandic banking system frozen.

Monmouthshire's finance chief Steve Greenslade revealed the £1.2million it had invested in Heritable Bank was due to be returned next week. Gwent Police Authority also has £1million in Landsbanki which was due for repayment on October 17.

It was a shock when the Icelandic banks went into receivership earlier this week as they had previously received excellent credit ratings from the experts.

Monmouthshire said this would have no immediate impact on services.

Mr Greenslade, corporate director for regeneration, environment and resources, told the Argus they were making every possible effort to get the money back.

He explained they were in discussions with the local government associations and meetings were being sought with the Treasury.

Mr Greenslade said the amount invested in Heritable was small compared with their total portfolio of around £70 to £80million. He added they had lost control of the money at the moment but it was too early to say whether it would be returned.

But he would not expect it to have a major impact on services or council tax.

Mr Greenslade said the council used specialised advisors and he always kept a close eye was always kept on investments but the crisis had occurred very quickly.

A spokeswoman for the police authority (GPA) said the £1 million was deposited with Landsbanki on April 29 when the credit ratings met their requirements.

"Their credit rating dropped below our acceptable minimum on September 30 but the conditions of the loan precluded early repayment."

Like the councils, GPA "spread the risk" by investing in a number of financial institutions but pointed out there was no bank, building society or other similar organisation that provided absolute safety.

Currently GPA has investments of £39.5 million, made up of 25 separate loans with 17 banks, building societies and local authorities. No more than £3 million was placed with a single group of banks at any one time.

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