Councils recover £5m lost in Iceland

12 Oct 15

Councils in England and Wales have now recovered another portion of the more than £1bn in deposits that was lost when the Icelandic banking system collapsed in 2008.

More than a dozen local authorities have secured an outstanding amount of over £5m.

A Local Government Association spokesman said: “From day one we have always been clear in our determination that local government would fight to recover the lion’s share of the money deposited in Iceland at the time of the crash.

“The tenacious efforts of local government working together to get this money back have paid off.”

Virginia Cooper, partner at law firm Bevan Brittan, which has helped councils recover some of the money lost when the Icelandic banks went down, said: “We are very pleased that almost all the public money that was feared lost in the Icelandic banking crash has now been recovered.

“This brings to an end a long running saga for these councils – and is a significant achievement for local government working together in a combined legal initiative.”

According to Bevan Brittan, Icelandic krona owned by councils was trapped in an escrow account.

The claims were subsequently sold to Deutsche Bank. The proceeds of the sale were paid in sterling and this closes the legal action in respect of the insolvent estates.

“Each authority involved in the process received the same price, and the money was safely received by them last week,” the firm said.

A number of other authorities are still awaiting the return of money that is trapped in escrow accounts.

  • Vivienne Russell

    Vivienne Russell is managing editor of Public Finance magazine and publicfinance.co.uk

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