Council's cash on ice (From Wiltshire Times)

Council's cash on ice

10:59am Tuesday 21st October 2008 in Latest News By Wiltshire Times Reporter

WILTSHIRE County Council could get back only a third of the £8m it invested in an Icelandic bank that has collapsed.

The council lodged the cash in Heritable Bank, a UK firm owned by the Icelandic Landsbanki Island Group.

Heritable went into administration on October 7 and all deposits have been frozen.

In a report to the council's Cabinet, which will be discussed at a meeting this morning, chief financial officer Sandra Farrington writes: "The administrators have been approached and Wiltshire County Council will be treated as unsecured creditors when the assets of Heritable Bank plc are distributed.

"Secured and preferred creditors will receive payments before any unsecured creditors. Any payment would exclude investment interest which equates to a loss of approximately £27,000 per month.

"The latest advice from the Local Government Association is that we will receive at least one third of the money back with efforts continuing to ensure 100 per cent recovery."

The Cabinet will decide today whether to continue investing money in overseas banks with or without tightening up the criteria or place all money in accounts held by the Government which would be a risk free approach but with lower rates of interest.