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Icelandic cash partial recoup
REPAYMENT of West Lindsey Council's £7m investment in Icelandic banks could take 'years', it emerged last week.
The council clawed back over 300,000 of the 7million it had invested in the banks at the end of July, and it is expected another 200,000 will be paid back before the end of the year.
Joint administrators for Heritable Bank Plc, the UK branch of Icelandic bank Landsbanki, sent the council an instalment of 325,193 at end of July, as part of repayments of the 2m the council had invested in the bank.
If West Lindsey Council is confirmed as a preferred creditor, the 5m invested in Landsbanki itself and fellow bank Glitnir is expected to be repayed in full, said Darren Turner, director of resources at West Lindsey Council.
”As regards Heritable Bank, we are being told by the liquidator, Ernst & Young, to expect between 70 to 80 per cent repayment,” he added. ”This figure is reviewed every six months.”
Another sum from Heritable’s liquidators is expected by the end of the year, this time a figure of 10 per cent of the council’s investment - around 200,000.
”We will not necessarily know about our preferred creditor status until March/April next year and that is likely to be when the first distributions from the two Icelandic registered banks will arrive,” said Mr Turner.
Mr Turner was unable to provide a set date for the final repayment, saying it was ‘impossible’ to say when the situation would be fully resolved - but added that it would take ‘years’.
”I would expect for the Heritable Bank position to be sorted sooner as it is being liquidated through UK laws – perhaps the next 18 months,” he said.
”As regards the Landsbanki and Glitner, there is undoubtedly a large amount of litigation to go through and therefore I can’t see final settlement for a good few years.”
Coun Pat O’Connor has spoken out against the news, adding that he has been ‘proved right’ after he spoke out against the investment practices in October.
”At the time, I saw this would cause some financial difficulty for projects that are ongoing,” he said.
”Since then, there has been a freeze in recruitment, and in other things that have been invested.”
”Overall, I think it has been a disaster for the council, and it will take many years of recovery.”
A report commissioned by council leader Bernard Theobald said the authority used ‘good practice’, that banks used met the required ratings, lending limits were not breached and that council records were complete, accurate and properly authorised, following an investigation into how the investments were made.
No plans have been made on where July’s recouped money will go, but it will likely be placed in the 2010/2011 budget with any other repayments.
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Saturday 04 February 2012
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