Ernie Clark. Hilperton Division, Wiltshire Council.

WCC might lose £8 million in the Icelandic bank problem.
'ICELANDIC BANK SITUATION

You will be aware of the recent problems that are facing the banking sector in this Country and abroad.

The County Council agreed its current investment strategy in February 2008. This strategy was designed to optimise interest within a framework of ensuring security of capital by investing only in banks with a strong credit rating.

As part of this policy, Wiltshire County Council 3 months ago invested £8 million with Heritable Bank a UK bank owned by the Icelandic Landsbanki Island Group. The Council invested with Heritable which was a reputable bank with a strong credit rating as part of the Council’s policy to optimise investment income while ensuring security by investing in strongly rated banks.

Yesterday it was announced that Heritable Bank had gone into Administration. At this point in time we are waiting for the appointed administrators Ernst & Young to inform us of the process to recover our funds.

Wiltshire is joining with the Local Government Association in backing their call to Central Government that Council Assets are protected in the same way as individuals savings deposits have been.

We are confident this will have no impact on the immediate provision of services to people in Wiltshire.

However, if we are unable to recover some or all of these funds we, like many other Councils, will have to review our longer term plans.

At any one time the County Council like all Local Authorities has money it is holding to use for forthcoming activities. This money is invested until it is needed to ensure we get the best possible income for the people in Wiltshire.

Overall the Council has £79 million invested across 13 banks. No one investment in any group of banks is more than £15 million in accordance with our current Treasury Management Strategy. The market situation is being constantly monitored.'