Cornwall County Council has £5m invested with the Icelandic bank Landsbanki – which has collapsed – and is waiting to hear whether this sum will be covered by the guarantees issued by the UK and Icelandic governments.
On Wednesday, in the House of Commons, Chancellor Alistair Darling confirmed that he was aware of the position of many local authorities with investments in Icelandic banks and was considering what action he would take.
Spread
The council currently has £360m in investments which are spread over a large number of institutions. The council has a long standing and actively-managed policy of spreading the risk for its investments across a wide range of organisations.
Brian Higman, the council's executive member for corporate support, said that staff from the treasurer's department carried out a comprehensive check on the credit rating of Landsbanki before the investment was made in June this year. At that time the bank had a high credit rating.
'This is a time of unprecedented market turmoil and we don't yet know the position with regard to our investment,' he said.