Lancaster City Council backs LGA evidence on Icelandic banks
Lancaster City Council has endorsed evidence from the Local Government Association to a Parliamentary Select Committee on the Icelandic banking crisis.
Lancaster City Council has endorsed evidence from the Local Government Association to a Parliamentary Select Committee on the Icelandic banking crisis.
The Communities and Local Government Select Committee is in the process of investigating the decision by local authorities across the country to invest in Icelandic banks.
The banks failed at the end of September last year as victims of the global recession.
On January 28 Coun Richard Kemp from Liverpool City Council, deputy chairman of the LGA, gave evidence to the committee on behalf of more than 100 local authorities which had invested in the banks.
He told the committee that councils had “acted prudently” within strict guidelines to get the best rates of interest on savings and any accusations that the councils had acted “recklessly” should be dismissed.
Coun Kemp added that discussions with the banks’ administrators had been “hugely encouraging”.
The comments back up the council’s own findings, which were presented to the Budget and Performance Panel and Audit Committee last year.
The two committees heard that the council’s investments, totalling £6million in three banks, were placed in-line with the council’s Investment Strategy, which takes into account guidance from the Chartered Institute of Public Finance and Accountancy (CIFPA) and Treasury Management consultants.
At the time the investments were arranged, in 2007, all three banks were rated highly by the three separate credit rating agencies which the council uses.
Lancaster City Council’s chief executive, Mark Cullinan, said: “The decision to invest in the three Icelandic banks was made within strict guidelines taking into account advice from our professional Treasury Management consultants.
“Unfortunately, as with many other financial institutions and companies, they succumbed to global pressures associated with the ‘credit crunch’.
“We will continue to work closely with the LGA for the return of our investments.”
Date Updated: 19/03/09