Millions returned from busted Icelandic banks

Wakefield Town Hall.
Wakefield Town Hall.

COUNCIL and police authority bosses hope to recover most of the £15m they thought they had lost when the Icelandic banks went into meltdown.

Wakefield Council has got back £6m of £9m it had invested in the banks when a global financial crisis hit in 2008.

More of the council’s money is still being held in Icelandic accounts, and the cash has not yet been transferred because of temporary restrictions on the movement of Icelandic Kroner out of the country.

The council’s £9m investment was made up of £3m each deposietd with banks Glitnir, Landsbanki and Landsbanki’s Scottish subsidiary Heritable.

Judith Badger, the council’s director of finance, said: “The council has no doubts or concerns whatsoever about these funds being returned, but accepts that it will take time to work through the necessary procedures to allow the transfer of funds to take place.

“Discussions are ongoing between the local authority creditor group and the Central Bank of Iceland to seek to secure permission for these funds to be transferred.

“In the meantime, these funds are earning interest which will be paid over to the council when the funds are 
returned.”

A report to the council’s audit committee next week said the funds released by Landsbanki and Glitnir were earning interest of 3.4 and 3.35 per cent.

In October 2011, the Icelandic Supreme Court ruled that Wakefield’s claim against the banks held priority status.

The audit report said: “As at June 2012 therefore, the council has received total payments of £6.172m towards its claims against the three banks.

“Ultimately the council expects that the total of payments it will receive will be around £9m.”

West Yorkshire Police Authority had £6m invested, £3m each in Landsbanki and Heritable.

The authority has received £2.271m back from Heritable and expects to eventually recover £2.588m.

It has recovered £1.31m from Landsbanki and had been advised to assume a 100 per cent return of its £3m in that bank.