MILLIONS of pounds of Wirral and Cheshire taxpayers cash is at risk following the collapse of banks in Iceland, it was revealed.
Wirral Council confirmed it has a £2m bond with the Icelandic-owned Heritable Bank and has invested a further £7.5m on behalf of the Merseyside Pension Fund.
Cheshire Council has £8.5m invested with Heritable Bank, a UK subsidiary whose parent bank Landsbanki has recently been put into administration by the Icelandic government.
Wirral Council has insisted the investments are expected to be honoured and Cheshire Council spokesman Ian Callister said: "While the money is apparently at risk because the bank has frozen all its assets, the situation remains highly complex and is changing daily."
The two authorities are among at least 20 others which are thought to have exposure running into millions of pounds.
Mr Callister said: "The money was invested in accordance with the Treasury Management Strategy to spread the risk by placing deposits with a large number of highly credit-rated institutions and to get the best possible return for our Council Taxpayers.
"It was approved by Council and managed in line with best practice principals and Government guidelines.
"Consequently we are liaising with the Local Government Association in an attempt to establish whether the Government will give similar protection afforded to individual savers."
Cheshire County Council has a gross budget of £1bn and £200m invested with national and international financial institutions. The Heritable Bank investment represents just 4% of the authority’s total portfolio.
A spokeswoman for Wirral Council said: "Wirral Council has stringent risk controls in place which ensure that its investments are diverse with limited exposure to any one asset class, market, sector or stock. Investments are made following independent advice and within strict guidelines.
"The Council has no current accounts or share holdings (the money which is most at risk) with any Icelandic banks.
"Wirral Council has a £2m term bond (preferable bond) with Heritable Bank. Merseyside Pension Fund, which is administered by Wirral Council, has a £2.5m term bond with Heritable Bank and a £5m bond with Glitnir Bank. We expect these bonds to be honoured.
"To put the figures into some context, Wirral Council made £4m through investment activity last year, which was placed into reserves to ensure that local services are not affected by changes in financial markets.
"Considering the exposure that other local authorities have had with Icelandic Banks, the impact on Wirral Council is minimal. However, we will continue to monitor the situation closely.
