Banks cri­sis could cost KCC mil­lions

Fi­nance chiefs ad­mit frozen Ice­land cash could cost KCC £6mil­lion in­ter­est

Kentish Express Ashford & District - - Countryfile - by Paul Fran­cis pfran­cis@thek­m­group.co.uk

po­lit­i­cal ed­i­tor KENT County Coun­cil says its de­ci­sion to sus­pend in­vest­ments abroad be­cause of the cri­sis that has hit Ice­landic banks could have a £6mil­lion price tag.

The au­thor­ity put on hold any new de­posits in for­eign banks af­ter it emerged that £50mil­lion it has in­vested with three Ice­landic banks could be at risk.

In­stead, money is be­ing de­posited with the Trea­sury un­til the out­come of an in­de­pen­dent in­quiry set up to in­ves­ti­gate what hap­pened is known.

While money in­vested with the Gov­ern­ment is re­garded as safer, coun­cils who do so are earn­ing less in­ter­est than they might do with banks abroad.

Ac­cord­ing to County Hall fi­nance chiefs, if KCC main­tains its pol­icy, it could earn about £6mil­lion less in in­ter­est from in­vest­ments.

The ad­mis­sion came at a County Hall meet­ing where a cross-party watch­dog com­mit­tee quizzed the politi­cian in charge of KCC’s money over what had hap­pened.

Cllr Nick Chard (Con), KCC’s cab­i­net mem­ber for fi­nance, told county coun­cil­lors the pol­icy to sus­pend for­eign in­vest­ments and put money on de­posit with the Gov­ern­ment could have im­pli­ca­tions for the au­thor­ity’s bud­get.

“While (the money) is safe, it does have cor­re­spond­ingly lower in­ter­est rates and that will have an im­pact on the coun­cil’s bud­get be­cause the in­ter­est has (pre­vi­ously) helped off­set in­creases in the coun­cil tax,” he said.

Asked to quan­tify the po­ten­tial im­pact for coun­cil tax­pay­ers by Con­ser­va­tive back­bencher Cllr John Sim­monds, KCC fi­nance di­rec­tor Lynda McMul­lan told the meet­ing: “There is a sig­nif­i­cant dif­fer­ence in the in­ter­est rates that we would re­ceive...if we moved all of our money, the cost would be about £6mil­lion.”

KCC still has about £163mil­lion in­vested in for­eign banks but it is still un­clear when and if it will get all of its Ice­landic money back. Ne­go­ti­a­tions in­volv­ing coun­cils and Trea­sury of­fi­cials are con­tin­u­ing about how to re­solve the cri­sis.

Cllr Chard, who sidestepped a Labour ques­tion about who should take the rap for KCC’s de­ci­sion to in­vest in Ice­land, said it re­mained un­clear whether all the money would even­tu­ally be re­cov­ered.

How­ever, he pledged to make pub­lic the re­port KCC had com­mis­sioned from in­de­pen­dent au­di­tors Price Water­house Cooper.

KCC’s fi­nan­cial ad­vis­ers, who had been in­vited to at­tend the meet­ing, de­clined to at­tend. Rep­re­sen­ta­tives of the firm But­lers said they wanted to wait un­til KCC’s in­ves­ti­ga­tion was com­pleted be­fore com­ing to an­swer county coun­cil­lors’ ques­tions.

Newspapers in English

Newspapers from UK

© PressReader. All rights reserved.