Hope for recovery of taxpayers' cash
NEWCASTLE Borough Council expects to recoup some of its losses from a failed Icelandic bank, but taxpayers in Stoke-on-Trent are no closer to getting their money back.
The borough council, along with Stoke-on-Trent City Council, East Staffordshire Borough Council and the now-defunct Cheshire County Council, had a combined £20 million frozen when Iceland's three biggest banks collapsed last year.
-
Now administrators acting for Heritable Bank, which held £2.5 million deposited by Newcastle Borough Council last September, have given the clearest indication yet that the bulk of the money will be repaid.
In a six-month update on the position of Heritable Bank, administrators Ernst and Young say creditors could recover up to 80 per cent of funds.
Councillor Helen Morris, Newcastle's cabinet member for resources and efficiency, said: "This is a positive statement by Ernst and Young and we certainly welcome it.
"However, the borough council's position remains the same – we are trying to get all of our investment back."
It is understood councils will get their first payment from Ernst and Young within the next few months.
Newcastle Chamber of Trade president Doug Morris said: "Anything that lessons the potential liability on the taxpayer has got to be a good thing."
Heritable is a UK bank which was placed into administration after its parent bank, Landsbanki, was nationalised by the Icelandic government.
Because Heritable was based in the UK, it is governed by the Financial Services Authority (FSA), prompting optimism that cash will be repaid.
However, Stoke-on-Trent City Council deposited its £5 million in Landsbanki.
The FSA has no authority over that or the other Icelandic bank, Glitnir, where up to £1 billion of UK public money is thought to have been invested, and those negotiations are a separate issue. City councillor Kieran Clarke, portfolio holder for resources, said: "Stoke-on-Trent City Council does not have any money in Heritable Bank.
"The authority has money invested in its parent bank, Landsbanki, and negotiations are ongoing into recouping this."
Cheshire County Council invested £8.5 million with Heritable.
The authority ceased to exist on April 1 this year when its services and responsibilities – along with the debt – were transferred to Cheshire East Council and Cheshire West and Chester Council. The bulk of cash owed to Cheshire County Council is also expected to be returned.
No-one from Cheshire East Council was available for comment.
More related links:
Comments