Monmouthshire's Icelandic depression

Wednesday 15th October 2008 10:00 pm
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MONMOUTHSHIRE council tax and services will not be affected despite a loss of over £1million invested in a subsidiary of fallen Icelandic back Landsbanki.

Of an investment portfolio of £64 million, Monmouthshire County Council's corporate director for regeneration, environment and resources Steve Greenslade (pictured) revealed that the £1.2 million of the council's money was invested in Hereitable Bank, a UK bank and a subsidiary of Landsbanki.

Mr Greenslade told a meeting of the authority, "The amount £1.2 million was made within under the council's treasury management strategy and each bank had to be rated sufficiently high enough."

The investment was taken out in July on a three month fixed term and was due to be repaid very shortly.

He said it was too early to say whether the council get some or all of the money back, "We are currently working with the Welsh Local Government Association, the Wales Assembly Government and the Treasury. My guess is it will be a while before we hear anything on that."

Mr Greenslade told the Chronicle that there would be no impact on council tax or service in at least the short to medium term, he said, "Our investment interest is used to support the revenue budget and the income coming from our other investments is more than enough to cover the gap left from any income loss from this single investment"

Monmouthshire County Council has £64 million invested in a number of institutions that were all given a first class credit rating at the date of the investment, however, Mr Greenslade admitted that there were two banks involved that he would now invest in as they do not meet the high Treasury criteria as their ratings have dipped.

" That is not to say the banks are on the verge of collapse," he said.

Mr Greenslade said it was impossible to guarantee there were no risks but would continue to ensure that investments were only made with the highest rated organisations.

The £1.2 million invested by MCC was part of the £66 million invested by councils and police forces across Wales.

Gwent Police Authority also had £1 million in Landsbanki which was deposited on April 29 when the credit ratings met their requirements.

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

GPA also "spread the risk" in the same way as councils by having investments worth £39.5 million made up of 25 separate investments with 17 banks, building societies and local authorities with no more than £3 million placed with a single group of banks at any one time.

Welsh Secretary Paul Murphy last week said the losses should not lead to higher council tax bills.

He said: "There isn't a case for Welsh taxpayers to be worried that bills will rise as a result of this issue. The WLGA itself has indicated the figures are not large enough to produce an effect in that regard."

Powys County Council banked £4m with Landsbanki and Glitnir - approximately six percent of its cash investments.

Kirsty Williams, AM for Brecon and Radnorshire commented, "This is clearly very worrying news. 

"We still do not know what the ramifications will be and whilst it may only be a comparatively small part of the council's overall budget I am concerned that it must not mean the threat of cuts to frontline services or the raising of council tax.

"Alistair Darling has not yet made it clear whether Local Authorities' money will be guaranteed in the same way that individual savers have been protected.  This is tax payers' money and is essential for the running of local services.

"We are seeking an urgent meeting with Powys' Head of Finance to discuss  the  options and the best way forward to ensure funds are protected.

Roger Williams MP for Brecon and Radnorshire said he had written to the Chancellor of the Exchequer, Alistair Darling to ask the government to provide assistance."

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