Westminster City Council’s finances continue to suffer from the ill-fated decision to invest £16.25 million in Icelandic Banks, with £5.75 million still outstanding and unlikely to be repaid until 2018, according to Council Finance officers. Labour Councillors say that the loss of this money has led to cuts in Council services, including the £350,000 Arts and Culture budget.
In a report to Councillors, Council Finance officers say;
“The City Council had a total of £16.25 million in term deposits with two Icelandic banks which are currently in administration:
- Heritable Bank: £9.85 million
- Landsbanki Bank £6.40 million
5.2. This amount had been written down to £6.1 million in the Annual Accounts as at 31 March 2012. To date, Westminster has received a total of £7.2 million from the Administrators of Heritable and approximately £3.2 million from the Administrators of Landsbanki.
5.3. Current indications from the administrators of Heritable Bank are that up to 85% should be recoverable as part of the administration process and around 90% from Landsbanki, though in the latter case, the repayment period for the remaining amount is thought to be through to 2018, uncertain as to currency and Icelandic legal / regulatory controls.”
Councillor Paul Dimoldenberg, Leader of the Labour Group, said;
“The Conservative decsion to invest so much public money in Icelandic banks has cost Council Tax payers a small fortune. Nearly £6 million is still outstanding and has led directly to big cuts in Council services including the proposed axing of the Council’s entire £350,000 a years Arts and Culture budget”