No Panic over Icelandic bank say South Ayrshire Council

Oct 17 2008

COUNCIL chiefs admit that they have £5 million in public cash tied up in a failed Icelandic bank.

But they insist that there is no immediate threat to jobs or services as a result.

South Ayrshire’s council leader Hugh Hunter explained this week that there is no need for anyone to panic.

He said: “I’d like to reassure people that we have no problem with cash flow.

“I know that there have been stories about councils in England worried about paying wages. But we have no problem at all.

“There is no immediate impact on services at all. There really is no need for anyone to worry.”

The council have two short-term deposit accounts with Landsbanki.

The £3 million deposit was due to be repaid to the council in November followed by a £2 million account in early December.

Councillor Hunter explained that the council followed government advice in choosing Landsbanki.

He said: “It had an F1 credit rating, that’s the highest you can get.

“We used external treasury management consultants to advise us on the strength of banks and different rates.

“This kind of treasury management made South Ayrshire £2.3 million last year. There is no question that anyone in the authority has done anything wrong. We acted as we were advised to by the government.”

South Ayrshire is one of a number of Scottish councils caught up in the banking crisis.

The UK and Scottish Governments will meet with CoSLA representatives from the affected local areas this week.

Mr Hunter added: “Of course we are working on a worst case scenario plan but it is unlikely that we will have to go that far.

“We are confident that we can find a solution to this.

“Once again, I’d like to assure people that cashflow is fine, liquidity is fine. There is no immediate threat to services.”