Icelandic banking crisis could affect Wychavon

5:10pm Thursday 9th October 2008

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WYCHAVON District Council could lose up to £1.5m as a result of the Icelandic banking crisis.

The authority has the money invested in the bank Landsbanki, which became the latest victim of the credit crunch this week when it went into liquidation. The amount invested is a two year fixed term deposit which was agreed over a year ago in August 2007.

Wychavon deputy managing director, Vic Allison admitted the situation is ‘unclear’. He said: “The bank had a good credit rating and there was no reason for the Council not to invest in the bank. We follow Government guidelines and take advice on our investments.

“We are trying to clarify what the current situation is and what this might mean for us.”

He added: “We have no other investments in Icelandic banks and the rest of the Council’s portfolio seems reasonably secure, given these uncertain times. We have managed our risks by spreading our investments across a number of banks and building societies to limit our exposure to such events.”