SBC set to recoup £8.75M in Iceland banks clear-up

SCOTTISH Borders Council is expecting to re-coup up to £8.75million in the aftermath of the collapse of the Icelandic banking system – but may have to wait seven years for the cash to be fully repaid.

SBC welcomed news that its £5m worth of deposits in Landsbanki has been given priority status, along with those of 90 other councils, over other creditors after a test case in the District Court of Iceland.

SBC estimates a figure of £4.25million to £4.5million will be claimed back from the bank after its collapse in 2008, although the final payment is not expected until October 2018.

The council has received half of the £5m it invested in Heritable Bank, and expects to be handed back a further £1.75m by September next year.

Tweeddale councillor Neil Calvert, SBC’s depute leader (finance), said: “This is good news – it means that councils will be at the front of the queue when it comes to getting money back following the collapse of the Icelandic banks.

“It allows us to confirm the original return estimate of 85-90 per cent, which we are now more confident of getting back from Landsbanki.

“It moves Landsbanki a stage nearer to making dividend payments, which is what we all want to see.”

A SBC spokesperson added: “The way in which the council has co-ordinated its legal action in this matter with the Local Government Association, other local authorities and universities has minimised legal costs for all parties involved.

“The cost of litigation to date amounts to less than one per cent of the money that is expected to be recovered.

“If there is a further legal challenge, the council will continue to co-ordinate its response in a similar way.”

A public inquiry into SBC’s decision to deposit funds in the Icelandic banks, which offered high interest rates, was called for by the Jedburgh-based former Scotsman journalist Bill Chisholm last November.

He said councillors were unaware that £10m from SBC coffers had been “gambled” but chief executive David Hume said auditors had decided all processes had been complied with properly.

A total of 105 UK local authorities have been involved in two separate court battles to reclaim some of the deposits and cash belonging to councils, police authorities and other local government agencies.

It is estimated more than £750m is still owed to British taxpayers from three Icelandic banks.