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County set to receive Iceland cash

PUBLISHED: 10:08 15 July 2009 | UPDATED: 14:24 03 July 2010

MILLIONS of pounds of Norfolk taxpayers' cash currently frozen in Icelandic banks will start being clawed back this month.

And county council bosses are hoping that eventually to get back £26m of the £32.

MILLIONS of pounds of Norfolk taxpayers' cash currently frozen in Icelandic banks will start being clawed back this month.

And county council bosses are hoping that eventually to get back £26m of the £32.5m locked up in the institutions.

When the Icelandic banks went into administration last October it was a major blow for Norfolk County Council, which had invested cash in three of the institutions.

Today county council bosses said, although the situation is constantly changing, they were optimistic they would get back £26m of the authority's investment, with the first £2m likely to return to County Hall's coffers later this month.

Breckland Council, which has £12m tied up in three Icelandic banks is also hoping to get back its first payment this month, with a payment of £400,000 due.

Norfolk County Council had £15m in Landsbanki, £10m with Kaupthing and £7.5m with Glitnir and feared the cash could be lost when the banks were taken into administration by the Icelandic government and their accounts frozen.

The council believes ultimately it will get back a minimum of 50p in the pound from its £10m in Kaupthing, but the first payment of 20p in the pound is expected by the end of this month, which will see £2m returned to Norfolk.

But it has been a more difficult process untangling the Icelandic registered banks Landsbanki and Glitnir, with the first repayment due towards the end of this year.

At one point the county council had hoped to get back between 95pc and 100pc of the £15m tied up in Landsbanki, although financial experts now fear the figure could be closer to 83pc if the council secures preferential creditor status.

The council hopes the full £7.5m will be clawed back from Glitnir, so long as preferential creditor status is secured.

The independent Audit Commission has already carried out an investigation into investment decisions made by a large number of public bodies and concluded Norfolk acted properly and was alert to risks at the time the investments were made.

Daniel Cox, leader of Conservative-controlled Norfolk County Council, said: “When the Icelandic banking crisis occurred, we were able to cope without an immediate impact on services.

“Now there is greater confidence than ever before that a very significant amount of money will eventually be returned to us.

“Even though this is likely to be a drawn out process, these funds will be very welcome at a time when our finances are likely to come under greater and greater strain in what are challenging times.

“So, overall, this is a positive development and the return of the first tranche of funding is certainly welcome.”

Breckland Council has £4m with Kaupthing and hopes to get £400,000 by the end of this month, with a further four payments to 2012.

Of the £6m it has in Landsbanki, it expects to get £1.5m by the end of March next year and three further payments by 2012, while it expects to get all £2m invested in Glitnir back by March next year.

Great Yarmouth Borough Council has £2m with Heritage Bank, part of Landsbanki, and finance officers said last month that they hope to get back 70pc to 80pc of that cash.

Do you have a story about a local council? Call reporter Dan Grimmer on 01603 772375 or email dan.grimmer@archant.co.uk

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