Date: 09/10/2008
High Peak Borough Council is among a large number of other local authorities and public bodies that have investments with the Icelandic bank, Landsbanki, and its UK subsidiary, Heritable Bank.
The Borough Council has investments of £1million in each of these banks. The two-year fixed term investment in the Heritable Bank was made in November 2006 and is due to be returned in November 2008. The one-year investment with Landsbanki was made in April 2008 and is due to be returned in April 2009.
At the time of making the investments, both banks were within the ratings approved by the Council's Treasury Management Strategy, and these ratings were only downgraded within the last few days.
Borrowing and investment adviser, Sector, has kept the Council continually advised of the situation and it, along with other city advisers, will be assisting the Local Government Association in their discussions with the Government on the way forward.
Emily Thrane, Deputy Leader and Executive Councillor for Corporate Services, said: "Two million pounds is a great deal of money to a district council of High Peak's size, and without government intervention, the effect of losing such a sum would have serious consequences to council services.
"At the moment, we are taking our own professional advice and are looking to work with the Government in the interests of our council taxpayers."