11/10/2008North Ayrshire's £15m investment in Icelandic banks
Statement from Councillor David O'Neill, Leader of North Ayrshire Council:
"The Council has investments with both the Landsbanki (£5m) and Glitnir Bank (£10m) in Iceland. These deposits were taken out within the last 12 months and were made in accordance with the Council's approved investment strategy. At the time of investment these banks provided a good return at minimum risk - illustrated by the £800m of exposure by UK local authorities.
"At this stage, no council services are affected by this issue.
"Discussions are ongoing at Scottish and UK government level to pursue a guaranteed return of the investment.
"In terms of potential council tax increases and effects on the communities of North Ayrshire, whilst no detrimental impact is envisaged at this time, the matter is being closely monitored."
Update 24/10/2008: Statement from local MSP Kenneth Gibson
On Wednesday, 15th October, 2008, NAC Leader, Cllr David O'Neill, Secretary of State for Scotland, Jim Murphy MP, Scottish Government's Cabinet Secretary for Finance, John Swinney MSP and Cllr Pat Watters, President of COSLA (Convention of Local Authorities) met with Treasury officials from London to consider the position.
The Treasury group lead outlined the discussion to date. The focus is on Glitnir and Landsbanki. A further bank is in fact a UK registered offshoot and is covered by the Financial Services Authority. It is clear that the discussions are complex and it may take some time before the situation is fully resolved.
With respect to support for local authorities the Treasury has provided no guarantees to cover deposits. However, should the Treasury offer support, this will apply equally to Scotland as this is a reserved matter.
The Scottish Government indicated it is willing to consider ways to facilitate any Scottish Council which has cash flow difficulties arising from deposits not being returned at the contract times. It is not anticipated the Council will require this but it is helpful to know this support is there.
Commenting, local MSP Kenneth Gibson said:
"I am relieved that the Treasury has agreed that, should support be offered to English local authorities, who have some £894 million tied up in Icelandic banks, then they will do the same for Scottish local authorities, who invested £46.5 million, including £15 million from North Ayrshire. I believe that support should be provided.
"On Friday at SNP Conference I again spoke to John Swinney and he gave a further re-assurance that those who enjoy the services of, or are employed by, North Ayrshire Council will not suffer as a result of this crisis. The Scottish Government will protect North Ayrshire from any cash flow problems that may arise while the return of these monies is pursued."
COSLA will represent Scottish Councils at future Treasury discussions and will hold a meeting of all Scottish authorities affected at which David O'Neill and Alasdair Herbert will attend.
In relation to the Council's financial position, there are no immediate concerns. The first deposit of £5m from Landsbanki is not scheduled for repayment until 14th November, 2008, and hopefully some clarity of the situation will be available by then.
"The Council has investments with both the Landsbanki (£5m) and Glitnir Bank (£10m) in Iceland. These deposits were taken out within the last 12 months and were made in accordance with the Council's approved investment strategy. At the time of investment these banks provided a good return at minimum risk - illustrated by the £800m of exposure by UK local authorities.
"At this stage, no council services are affected by this issue.
"Discussions are ongoing at Scottish and UK government level to pursue a guaranteed return of the investment.
"In terms of potential council tax increases and effects on the communities of North Ayrshire, whilst no detrimental impact is envisaged at this time, the matter is being closely monitored."
Update 24/10/2008: Statement from local MSP Kenneth Gibson
On Wednesday, 15th October, 2008, NAC Leader, Cllr David O'Neill, Secretary of State for Scotland, Jim Murphy MP, Scottish Government's Cabinet Secretary for Finance, John Swinney MSP and Cllr Pat Watters, President of COSLA (Convention of Local Authorities) met with Treasury officials from London to consider the position.
The Treasury group lead outlined the discussion to date. The focus is on Glitnir and Landsbanki. A further bank is in fact a UK registered offshoot and is covered by the Financial Services Authority. It is clear that the discussions are complex and it may take some time before the situation is fully resolved.
With respect to support for local authorities the Treasury has provided no guarantees to cover deposits. However, should the Treasury offer support, this will apply equally to Scotland as this is a reserved matter.
The Scottish Government indicated it is willing to consider ways to facilitate any Scottish Council which has cash flow difficulties arising from deposits not being returned at the contract times. It is not anticipated the Council will require this but it is helpful to know this support is there.
Commenting, local MSP Kenneth Gibson said:
"I am relieved that the Treasury has agreed that, should support be offered to English local authorities, who have some £894 million tied up in Icelandic banks, then they will do the same for Scottish local authorities, who invested £46.5 million, including £15 million from North Ayrshire. I believe that support should be provided.
"On Friday at SNP Conference I again spoke to John Swinney and he gave a further re-assurance that those who enjoy the services of, or are employed by, North Ayrshire Council will not suffer as a result of this crisis. The Scottish Government will protect North Ayrshire from any cash flow problems that may arise while the return of these monies is pursued."
COSLA will represent Scottish Councils at future Treasury discussions and will hold a meeting of all Scottish authorities affected at which David O'Neill and Alasdair Herbert will attend.
In relation to the Council's financial position, there are no immediate concerns. The first deposit of £5m from Landsbanki is not scheduled for repayment until 14th November, 2008, and hopefully some clarity of the situation will be available by then.
- Would like to know how NAC can have a council tax increase when Holyrood has already frozen council tax for the next 2 years. Apart from that, yeah right NAC, this is perfect for you lot to stop all "NON ESSENTIAL" services and works, time the electorate had its say.