CHESHIRE County Council invested with the troubled Icelandic subsidiary bank “at least a week” before its credit ratings began to drop, it was revealed.
Now the County Council has unanimously agreed a temporary change to its investment policy to help cope with the financial turmoil in the world money markets.
The authority, which has £8.5m deposited with Heritable – a UK subsidiary of Landbanski has carried out a full review of treasury management and investment strategies.
Members expressed full confidence in finance officers who invested the cash with Heritable at least a week before its credit ratings began to fall on Sept 30.
Wirral Council last week 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 in Icelandic institutions or their UK subsidiaries.
Cheshire County Council Leader Paul Findlow said: “The Local Government Association has confirmed that councils that invested Šbefore Sept 30, in accordance with DCLG guidelines, acted prudently. There can be no criticism of that decision.
"We were, of course, not alone and the long list of investors has been well publicised. Indeed, we believe that the Audit Commission – the body responsible for scrutinising public expenditure – hadŠ£5m with Heritable and £5m with Landbanski.”
Cllr Findlow added: “There appears to be hopeful signs that we will get at least some of our money back. Our council taxpayers can rest assured that we will be monitoring events very closely indeed.”
In a report before members, county finance officer Bill Tunnicliffe stressed that the authority’s approach had always been to prioritise security over rate of return.
But current increasingly difficult conditions called for amendments enabling money to be placed with finance institution supported by the UK and Irish Governments.
These included six Irish Banks covered by Dail Eireann, and UK banks and building societies that have secured capital investment from Whitehall like HBOS, RBS and Lloyds TSB.
It will also mean more frequent use of the highly credit-rated money market funds and the UK Government Debt Management Account Deposit Facility – considered to be “of the highest quality and extremely secure”.
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