Welsh public sector 'invested £74 million' in Icelandic banks » Local Government » 24dash.com

Wales's public sector has about £74 million exposed in Iceland's banking collapse, it was revealed today.

Eight local councils have a total of £56 million invested in failed Icelandic banks and subsidiaries, three police authorities have £10 million and three universities have £8.1 million.

In a statement to AMs in Cardiff Bay, Finance Minister Andrew Davies said while he would consider appeals for assistance, organisations caught up in the affair could not hope to be compensated by the Assembly Government.

Mr Davies said Welsh ministers were working closely with the UK Government in the attempt to release money stuck in frozen accounts.

Welsh NHS bodies and further education colleges were not exposed, he said. He added that "few" voluntary sector bodies were likely to be affected and most were covered by the Financial Services Compensation Scheme which guarantees £50,000 in bank accounts.

The Icelandic money was a "comparatively small proportion" of the total amount local councils have invested in banks, either in the UK or abroad.

Mr Davies said: "Should any public sector body ask the Assembly Government for assistance short term we will give very careful consideration to the case it makes.

"But I want to make it very clear that financial compensation is not an option.

"I would expect a prudently managed organisation to be able to navigate its way through the current difficulty - as indeed very much looks to be the case.

"Any prospect of compensation would clearly be very detrimental to the efforts being made to get the frozen investments returned."

Earlier, First Minister Rhodri Morgan said the Welsh Local Government Association (WLGA) and Local Government Association (LGA) thought it unlikely that any affected council would need to be bailed out by his administration.

Neath Port Talbot County Borough Council was the biggest investor among Welsh councils, with £8 million in two Icelandic banks and £12 million in UK subsidiaries.

Mr Morgan said: "Just to be absolutely clear again, recovery of the money from Iceland is a Treasury matter, now more recently a Bank of England matter because they have frozen the assets.

"Change in the guidelines is a matter for the Treasury.

"But if there was a local authority, in extremis, that can't meet their bills then it's a matter for them to come to us, as it would be to go to the Department of Communities and Local Government for English local authorities or police authorities.

"But we don't anticipate it. The WLGA and LGA both say it's most unlikely."