Audit Commission report on councils’ investments in Icelandic banks
An Audit Commission report shows that Lancaster City Council acted properly in managing its investments.
An Audit Commission report into councils’ investments in Icelandic banks has found that Lancaster City Council, along with most authorities, acted within guidance and acted properly in managing its investments and was alert to the risks.
The banks failed at the end of September last year as victims of the global recession.
The report backs 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 (CIPFA) 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 are pleased with the Audit Commission’s findings. Lancaster City Council will continue to work closely with the Local Government Association and currently expects to get the lion’s share of money back.”
Date Published: 14/04/09