Daventry District Council is moving to reassure residents of its current financial position after £8m of its investments were affected by the Icelandic banking crisis.
The Council currently has £8m invested with four Icelandic banks – Landsbanki (£3m), Heritable (£1m), Glitner (£2m) and Kaupthing Singer & Friedlander (£2m).
These funds form part of the Council’s investment portfolio. These investments are the Council’s reserves and interest from them is used to assist in the running of services.
Councillor Chris Millar, Leader of Daventry District Council, said: “I would reassure residents that there will be no immediate effect on the way in which we deliver our services. We have substantial reserves specifically set aside as a contingency for unforeseen events, such as this, in the short-term.
“Like the majority of UK councils, Daventry District Council deposits its funds in banks and other financial institutions worldwide to earn interest income to help fund services to the public. The Council’s strategy is to spread its investments and limit the amount of deposit so as to minimise risk and this investment strategy is in accordance with Government and Chartered Institute of Public Finance guidance.
“With the current global economic crisis, these are unprecedented times and all investors are in a real dilemma. As a Council we act as prudently as we can, continuously reviewing our investments, but we would need the Government to give confidence to public sector investors at this time by guaranteeing deposits in the many institutions affected.
“We are actively reviewing our investment strategy on an ongoing basis to minimise any further risk to our investments. This is being done in conjunction with specialist investment advisors regulated by the Financial Services Authority. It is extremely difficult to anticipate changes in the fortunes of individual institutions and the financial markets in these unparalleled times.”
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