Ice­land bank’s debts ex­ceed worth

Kentish Express Ashford & District - - Opinion -

COUN­CILS that in­vested money in Ice­land have been told that the debts of one of the banks in­volved are three times what it is now worth.

Kent County Coun­cil has £50 mil­lion tied up with three Ice­landic banks while Can­ter­bury City Coun­cil has £6 mil­lion and Sevenoaks, Ton­bridge and Malling and Dover have £1 mil­lion each. Kent Po­lice also has £10 mil­lion locked into the banks.

Ad­min­is­tra­tors of Lands­banki, one of the banks, have in­di­cated its li­a­bil­i­ties, of which 40 per cent are de­posits, are nearly three times the value of its re­main­ing as­sets.

Of the £50 mil­lion in­vested by Kent County Coun­cil, some £17 mil­lion is with Lands­banki.

In a brief­ing let­ter sent to coun­cil chiefs, the Lo­cal Gov­ern­ment As­so­ci­a­tion says it re­mains un­clear whether coun­cils will be en­ti­tled to greater pri­or­ity than other in­vestors when it comes to their claims to re­coup cash.

The note states that if coun­cils are viewed as what are known as “pref­er­en­tial cred­i­tors” the prospects of get­ting their money back would be en­hanced.

At risk

But it warns: “The is­sue is legally com­plex and fur­ther leg­is­la­tion is due to be passed in Ice­land which may have a bear­ing on this.”

There is more op­ti­mistic news about a sec­ond bank, Her­i­ta­ble, which is UKbased. KCC has £18 mil­lion on de­posit there.

Ad­min­is­tra­tors be­lieve that in­vestors are likely to get their money back and may also qual­ify for a div­i­dend.

Mean­while, in a sign the process of get­ting any money back could be pro­longed, the Gov­ern­ment has moved to al­low coun­cils to post­pone the im­pact of any po­ten­tial losses on ser­vices and coun­cil tax lev­els un­til 2010.

Lo­cal gov­ern­ment min­is­ter John Healey said: “This money isn’t lost, but it is at risk, so un­der nor­mal fi­nan­cial rules this risk would need to be taken into ac­count in their bud­gets.

“I was con­cerned about the pos­si­ble, and po­ten­tially un­nec­es­sary, ef­fect this could have on ser­vices and coun­cil tax. That’s why I am tak­ing this ex­cep­tional step that gives au­thor­i­ties some breath­ing space that should al­low them to be clearer what sums, if any, are still at risk.”

Pic­ture: Dave Downey pd1551219

The rail­way looking to­wards Westen­hanger from the site of the old Smeeth sta­tion, near where the man died

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