North East Councils get more cash from Iceland

TAXPAYER funds once thought lost in the Icelandic banking collapse look set to be recovered.

A person walking past an Icelandic bank

TAXPAYER funds once thought lost in the Icelandic banking collapse look set to be recovered.

The Local Government Association says it has secured more funds from Glitnir, one of several banks to collapse in 2008.

Nearly £1bn was feared lost when banks in Iceland, and British groups linked to them, collapsed amid the credit crunch. Across the North East councils that had invested savings in Icelandic banks faced massive cuts as a result.

Northumberland County Council and Northumbria Police Authority invested £23m and £3.5m respectively, while Gateshead Council deposited £4.5m in Heritable Bank, a UK subsidiary of troubled Icelandic firm Landsbanki.

Derwentside Council, which became part of Durham County Council’s unitary authority, invested £7m in Icelandic banks.

Now the LGA says Glitnir will transfer a total of £527m, divided among the organisations affected, becoming the first Icelandic bank to fully repay creditors.

The news has been welcomed across the region. A Northumberland County Council spokesperson said “Northumberland County Council expect to recover 100% of the £8m it deposited with Glitnir”. In Durham treasurer Don McLure said: “We are absolutely delighted that we have recovered £3.477m of local taxpayers’ money from Glitnir.

“Today’s payment brings the total amount we have recovered from Iceland’s failed banks to nearly £4.8m, with more to come.

“Despite our success, we are very conscious that the job isn’t finished.

“The Local Government Association and member councils will continue to work with the various winding up boards to expedite remaining payments.”

Papers presented to Northumbria Police Authority recently said it had so far received dividends totalling £3.6m and expects to receive at least 90% of the total losses. Gateshead Council’s strategic director of finance, Derek Coates, said: “Gateshead Council had £2.8m deposited in Heritable Bank when it went into administration. We have been receiving dividends every three months since this happened in 2008 and have so far recuperated £1.9m, which is around 68%.

“We expect all of the money to be repaid in full.”

Last night LGA chairman Sir Merrick Cockell, said: “We are absolutely delighted that we have been able to help our members recover all of the £180m of council taxpayers’ money from Glitnir.

Today’s payment brings the total recovered from Iceland’s failed banks to nearly £560m, with more to come.

“Despite our success we are very conscious that the job isn’t finished,” Sir Merrick said.

“We will continue to work with the various winding up boards on behalf of our members to expedite remaining payments.”

 

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