Councillor calls for ‘name and shame’ over Icelandic bank cash

Councillor Andrew Gardiner has demanded councillors who voted for money to be invested in Icelandic banks be held to account.
Councillor Andrew Gardiner has demanded councillors who voted for money to be invested in Icelandic banks be held to account.

Lancaster City Council has retrieved most of its money from Icelandic banks - but a councillor demanded to know who invested it in the first place.

Councillor Andrew Gardiner asked for names of councillors who agreed to invest £6m in Icelandic banks prior to the collapse of the country’s banking system in 2008.

During a meeting at Morecambe Town Hall, Coun Gardiner also asked if these people were liable for the council’s total net loss of £188,000.

The council had cash invested in all three Icelandic banks which collapsed in 2008: Kaupthing, Glitnir and Landsbanki.

Councillor Richard Newman-Thompson, cabinet member for finance, told the meeting on Wednesday that the final amount retrieved by the council amounted to 91% of the original investment.

“At one point we thought we weren’t going to get much back at all,” he said.

In response to Coun Gardiner’s question, Coun Newman-Thompson provided a statement after the meeting.

“As required by statute and proper practices as established by the Chartered Institute of Public Finance and Accountancy (CIPFA), each year full council approves an investment strategy as part of its Treasury Management arrangements.

“This sets out criteria to manage the security and liquidity aspects of placing investments with institutions.

“The Treasury Management strategy is considered and approved as part of the following year’s budget. In the case of the investments in Icelandic banks the relevant treasury management strategy was considered and the investment strategy was approved by full council on February 2 2007.

“The investments in Icelandic Banks were made by officers in accordance with the approved strategy.

“Following the Icelandic banking collapse, there was both local and national scrutiny of events. “The Icelandic banking collapse happened almost seven years ago, and much has changed in treasury management since then, in response to the global banking and economic crisis.”

The council has repeatedly said they invested the money in the banks because at the time of making the investments, they were reputable institutions with high credit ratings.

Icelandic banks owed around six times the country’s total Gross Domestic Product (GDP) and when the world’s credit markets dried up, they were left unable to refinance loans.

Iceland has since experienced an economic recovery.

Meanwhile it was also revealed at the meeting that the city council is currently holding £36m in investment accounts but £24m of this is owed to the Government for a non-domestic rate scheme, repayable at some point in the future.