Council wins back £12m lost in Icelandic bank crash

033649-1_Chi_CountyHall_LA''Chichester's County Hall.033649-1''Peter/Lou ENGSUS00120120404120200

033649-1_Chi_CountyHall_LA''Chichester's County Hall.033649-1''Peter/Lou ENGSUS00120120404120200

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West Sussex County Council has recovered the more than 12m lost in the Icelandic bank collapse.

At today’s West Sussex County Council meeting, in Chichester, councillors were told the authority will recoup between £12.6m and £12.9m that had been deposited with Heritable Bank and lost when its parent company Landsbanki collapsed in October, 2013.

An initial payment was made in August, 2013, but now the bank’s administrator has confirmed an additional payment will be made next month.

Leader of West Sussex County Council Louise Goldsmith said: “From day one we were determined to recover the money invested at the time of the crash.

“I remember saying that it would take between ten and 15 years so I’m delighted we’ve recovered this money for the taxpayers of West Sussex much sooner than that.

“Our determination has paid off and we stand to recover between 98 per cent and 100 per cent of the money we invested. This is good news for the West Sussex taxpayer. The money will go back into supporting our key frontline services.”

In total, councils across the UK had more than £1b invested with Iceland’s three largest banks which collapsed in 2013 - Landsbanki, Glitnir, and Kaupthing Singer and Friedlander.

At the time councils invested the money, Iceland’s banks had strong reputations and high credit ratings.

However it emerged following the collapse that the nation’s banking system owed an estimated six times the country’s Gross Domestic Product.

This meant Iceland’s biggest banks were unable to re-finance loans when the world’s credit markets dried up in the wake of the failure of US investment bank Lehman Brothers.

The Nordic nation became the first western European country in 25 years to appeal to the International Monetary Fund to save its battered economy.

Recovery rates have varied between individual councils.

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