North Ayrshire Council’s 6 year wrangle with two collapsed Icelandic banks is finally at an end.
local authority’s ruling SNP Cabinet will this week hear that all-but
£1.9m of a £10m deposit with the former Glitner Bank has been repaid.
The balance is currently held in an Icelandic escrow account (an account
administered by a third party, with funds disbursed once certain
contractual arrangements have been agreed). However, due to differing
interest rates – at the time of the bank’s insolvency compared to dates
on which funds were returned – it may be that North Ayrshire Council
could receive an overpayment of around 2.2%. Council officials will
tell the SNP Cabinet that it is not yet clear whether or not return of
any overpayment will be sought by Icelandic authorities.
will also brief councillors on a decision to sell the £2.3m debt still
owed by a second Icelandic bank – Landsbanki – to North Ayrshire
Council. The local authority had originally deposited £5m with the
bank, but £2.7m was returned between 2012 and 2013.
A report for
the Cabinet explains that, with the agreement of the Council’s SNP
leader, Willie Gibson, officers sold the outstanding debt through a
competitive auction process. In total, the Council finally secured
almost 96% of the initial £5m deposit. Had the local authority not
sold-on the Landsbanki debt to a third-party, it would have been 2019
before funds were returned to North Ayrshire.
The decision by the
previous Labour administration of North Ayrshire Council to ‘invest’
£15m in ‘high-interest’ accounts operated by foreign banks has been
severely criticised. The Icelandic accounts have since been described
as ‘too good to be true’, which, it has been claimed, should have rung
alarm bells. The overseas ‘investments’ put North Ayrshire’s money
beyond the jurisdiction of UK financial regulations.
Glitner and Landsbanki collapsed in 2008.