Warning over council funds

IT could take years to get back all the millions of pounds local authorities invested into the failed Icelandic banks, a financial expert has warned.Yarmouth Borough Council has invested £2m in Iceland's Heritable Bank, which collapsed in October, as part of a £40m investment in the country's banks by local authorities in Norfolk, including the county council and Breckland Council.

IT could take years to get back all the millions of pounds local authorities invested into the failed Icelandic banks, a financial expert has warned.

Yarmouth Borough Council has invested £2m in Iceland's Heritable Bank, which collapsed in October, as part of a £40m investment in the country's banks by local authorities in Norfolk, including the county council and Breckland Council.

The council's had hoped for hefty returns on the investment. But Mark Finch, head of finance at Breckland, told members of the council's audit committee on Friday that the situation could become as drawn out as the saga involving the BCCI (Bank of Credit and Commerce International) which was liquidated in 1991 affecting millions of depositors and losing billions of pounds.

He said: “BCCI has not yet been resolved. These things can take years and we have no idea how much we can expect to receive back or when it is likely to be received.

“We will wait and see with baited breath but we do not yet know how we will be treating it on our balance sheets at the end of the year.”

A group representing UK authorities is set to travel to Iceland with the support of the Local Government Association to argue the case for returning their funds. Officers from Kent County Council and Barnet Council will be making the trip with legal advisors Bevan Brittan.