Council changes policy after Iceland bank crash

The council had 9m saved in Icelandic banks.
The council had 9m saved in Icelandic banks.

Wakefield Council no longer has any cash tied up in foreign banks, after it nearly lost millions it had invested in Icelandic institutions, which then collapsed.

The local authority deposited a total of £9m with three Icelandic banks before the recession at the end of the 2000s.

Councils across the country had savings accounts with the banks following government advice.

Most of the cash was eventually recovered with help from the Local Government Association (LGA), though it took years because of restrictions on Icelandic kroner being moved out of the country.

Now the council has said that while it does have investments in other councils and banks in this country, none of its cash goes abroad.

Asked about the issue at an audit committee meeting, finance officer Colette Tyrell said that the banking crash was "before my time" at the council, but that investing in foreign institutions would now carry a high level of risk.

She said: "We only invest in UK banks and other local authorities now.

"We don't bank with anyone where we feel there might be a risk."

In response, Normanton councillor David Dagger added: "Colette's quite right.

"A lot of other local authorities had invested in Icelandic banks. Fortunately we got the money back."