Icelandic bank cash challenge

A LEGAL challenge is underway to get as much of taxpayers’ money back as possible from collapsed Icelandic banks.

Some of the money Daventry District Council invested in the collapsed Icelandic banks is already back in its coffers.

But the majority of it is now subject to a legal challenge in Iceland’s high court.

The district council had £8 million invested with four Icelandic banks when the banking crisis hit in 2008.

The council has been given ‘preferential creditor’ status with both Heritable and Kaupthing Singer and Friedlander.

So far it has received £1.6 million of the £3 million invested with them. It is expecting to receive 80 per cent of the original amounts by the end of 2012.

The other two banks – Glitnir and Landsbanki – are subject to a case in Iceland’s high court.

Ian Vincent, managing director of DDC, said: “We are recovering money at a reasonable rate and will continue to do so.

“With Glitnir and Landsbanki we’ve got preferential creditor status with one and not the other.

“From a legal point of view either we’re preferential or not with both.”

Creditors with preferential status will receive some 90 per cent of their investment back.

The invested money forms part of the council’s capital budget, used to pay for major projects like the town centre regeneration, and the planned joint crematorium with Rugby Borough Council.

Interest payments were used to help keep council tax low.

Mr Vincent said: “With interest rates what they are at the moment it’s not as much of an issue for us as if we were still in the heady days of of five per cent or more.

“At the moment we have more than enough money in the capital budget to carry on with our plans.”