Almost £29m of the £32.5m of Norfolk taxpayers’ cash which was frozen in Icelandic banks has now been recovered – after the county council sold its claim against one of the banks involved.

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Norfolk County Council had invested £15m in Landsbanki, £10m in Kaupthing and £7.5m in Glitnir when the Icelandic government took the financial institutions into administration in 2008.

The council, then under a Conservative administration, battled hard to recoup the money which had been invested in those banks, with cash clawed back in stages.

In October 2011, Iceland’s Supreme Court upheld a ruling made after the county council jointly led a High Court challenge that British councils which had cash in Landsbanki and Glitnir should be given priority over other creditors. The saga around Lansdbanki has drawn to a close, after the council, now under a Labour/Liberal Democrat administration, sold its remaining claim against the bank – netting a payment for the council’s coffers.

Steve Morphew, the county council’s cabinet member for finance, corporate and personnel, said: “I am satisfied that by using a competitive auction process, we have been able, after more than five years, to bring the recovery process for Landsbanki to an end.

“The sale means we have now recovered almost £29m (89pc) of our original £32.5m investment in three Icelandic banks, with more to come.

“Overall, we expect to recover more than 96pc of our original investments. Having fought Norfolk’s corner through the Icelandic courts, we faced many more years of uncertainty had we continued with the recovery process.

“It makes good financial sense to have sold our claim against Landsbanki and bank the money so it can be put to work supporting vital public services.

“This decision does not mean extra money for the council, but does remove some of the risk and uncertainty for our budget planning.”

Do you have a story about a local council? Call Dan Grimmer on 01603 772375 or email dan.grimmer@archant.co.uk

11 comments

  • Isn't the point this? Had NCC not invested its pot of £32.5m with the Icelandic banks all those years ago, that pot would now be worth more than £36m if you take into account the interest it would have earned. I don't think that Steve Morphew is predicting that NCC will recover in total 96% of £36m, so we the council taxpayers will still be well out of pocket. Have I missed something?

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    Nemesis

    Thursday, February 6, 2014

  • If the council is getting more money back all of a sudden, how can it not be "extra money for the council" - as quoted? Surely they haven't financially planned for an uncertain return of these funds? Thus it is extra money.

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    DT

    Thursday, February 6, 2014

  • NCC always refers to the original investment of £32.5m. But what about interest on that sum for the past five years? Even at a very modest 2% per annum, calculated as simple interest, that would amount to another £3.5m. Can Cllr Morphew let us know whether that also will be recovered? And then we have the professional fees involved in the litigation. This was a pretty shameful episode in the history of NCC. And do remebber, out of the 120 odd local authorities that invested with these banks, only three invested more than £32.5m. Some invested as little as £1m. Has anyone in County Hall ever accepted the blame?

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    John Martin

    Thursday, February 6, 2014

  • Morphew says "“This decision does not mean extra money for the council.........." It also does not mean that taxpayers (our) money is to be "squirrelled" away in a reserve fund either.

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    "V"

    Thursday, February 6, 2014

  • It is not extra money because there was a hole in NCC's finances because of the loss. It is good news that having started not thinking NCC would get any money back it is nearly all recovered. As for the loss in interest; that is capitalism for you. NCC gained above the market rate in interest payments from Icelandic banks when times were good and the opposite when those banks collapsed.

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    Jonny

    Thursday, February 6, 2014

  • Really excellent news for local taxpayers bu let's hope NCC's strategic treasury management team have learned an important lesson.

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    DWW25

    Thursday, February 6, 2014

  • Isn’t this article misleading? Have NCC sold the claim to their entire £15m plus interest in Landsbanki or had they already recovered any of it? How much did they let it go for, anyone buying it would want a profit from the sale? John Martin is correct to point out the costs of trying to recover this money - how much has this blunder cost the taxpayers?

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    Honest John

    Thursday, February 6, 2014

  • I think that it's a lesson the whole world needed to learn, NCC being just one entity amongst millions. Sadly I fear that for every person who has learnt at least one hundred would make the same choices again. One of the preferred pension fund providers for auto enrolment is a Scandinavian company claiming higher returns for lower investments than anyone here in GB can provide. Sounds familiar? Here we go again...

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    NigelS

    Thursday, February 6, 2014

  • Well that will cover the cost of the incinerator debacle as well! Who says two wrongs don't make a right?

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    Barking

    Thursday, February 6, 2014

  • Incidentally, the Head of Pensions, Investment and Treasury Services received a performance payment of £6,617 in 2008, up from 6,457 in 2007, followed by £7,142 in 2009.

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    Honest John

    Thursday, February 6, 2014

  • Yawn at some of the stupid comments,surely the key word is "recovered" which for anyone lacking the grey matter that is roughly opposite to lost and for those unsure of percentages they are based on a whole i.e 100%.So Cllr Morphew is stating that so far 89% has been recovered with a prediction that 96% will be the final amount I think that's an amazing announcement in this day and age of losses and must be a great relief to the massively under pressure financial cabinet at NCC....Bravo brilliant announcement Mr Morphew and I personally thank and appreciate you all.

    Report this comment

    NR1`EY

    Thursday, February 6, 2014

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