South Norfolk's Icelandic cash escape
PUBLISHED: 10:56 10 October 2008 | UPDATED: 10:43 12 July 2010
South Norfolk Council leader John Fuller has reassured residents that the authority has no investments in collapsed Icelandic banks.
And he revealed that South Norfolk Council moved £1 million from a subsidiary of Landsbanki just eight days ago.
SOUTH Norfolk Council leader John Fuller has reassured residents that the authority has no invest-ments in collapsed Icelandic banks.
And he revealed that South Norfolk Council moved £1m from a subsidiary of Landsbanki just a few days ago.
South Norfolk Council had invested a total of £2m in Heritable, a Landsbanki subsidiary in October last year.
Of that £1m matured in August this year, and was moved elsewhere and the second million matured on September 30.
However, 24 hours earlier on September 29, a ratings agency downgraded Landsbanki which prompted South Norfolk Council's decision to reinvest that final £1m elsewhere.
Mr Fuller said: "South Norfolk Council remains one of the country's financially strong councils, providing services to the public which the Audit Commission rates as excellent.
"In the case of Landsbanki, we are delighted to escape the current turmoil. We followed the guidance on spreading risk and not leaving all our investment eggs in one basket for long periods. So the rules worked, but that's little comfort to those councils who had locked away money for long periods."
Andy Radford, South Norfolk Council's director of finance and acting chief executive, said: "The council relies on interest earned from its cash deposits to fund frontline services. The security of this public money is critical. The council has always managed its cash investments so there is a balance between security and return.
"When some institutions began to struggle 12 months ago, we took the decision of tightening our criteria on which banks and building societies we could invest with, how much we could invest, and for what period. This has proved to be the correct approach.
"However, we are not are out of the woods yet, and we remain at some risk should some of the more secure UK banks or building societies get into difficulties."
South Norfolk Council's investment strategy is to spread the risk of any one institution failing by investing sums of up to £3m only. How much the council invests, who with and for how long is determined by the credit rating at the time of the investment.