Icelandic exposure tops £45m

THE known exposure of public bodies in the North West to Iceland’s troubled banks has topped £45m.

Lancashire councils have been worst hit with around £24m tied up in Iceland’s financial institutions.

The county council has £10m invested in Landsbanki which had its assets frozen after the Icelandic government called in administrators last week.

Four of the county’s district councils have confirmed they also have money tied up in Iceland: South Ribble has £5m, Chorley £2m, Lancaster £6m and Burnley £1m. Lancashire Police Authority has invested £670,000.

Cheshire County Council could also take a big hit. It has £8.5m invested, and across the border in Wales Flintshire has saved £3.7m with Iceland’s banks.

Bolton Council has £6m with Landsbanki and Wirral Council said it has a £2m bond with Heritable which it expects to be honoured.

On the weekend it emerged that one of the UK’s top cancer hospitals, the Christie NHS Foundation Trust in Manchester, has £7.5m in Iceland.

But the UK Government said there will be no automatic bailout – local authorities would be considered on a “case-by-case basis”.

Prime Minister Gordon Brown threatened legal action against the Icelandic government and condemned the bank collapses as “totally unacceptable”.

Lancashire councillor Tony Martin, the county council’s cabinet member for resources and performance, said the authority hopes to become a preferential creditor and get its money back from the administrators or whoever has taken over Landsbanki.

He said: “We cannot say it will not affect front-line services, although we will be doing our level best to make sure that does not happen.”

The Local Government Association (LGA) has reports from its member authorities that 108 councils have deposited £798.95m in Icelandic banks.