£5 million returned to local councils after Icelandic banking crash

A final tranche of money lost by more than a dozen local councils in the Icelandic banking crisis seven years ago has now been recovered.In total, £1.05 billion in deposits was lost to councils in England and Wales in 2008, with the majority of that amount already recouped.

But now, a final outstanding amount of over £5 million has been secured by more than a dozen local authorities bringing to an end their involvement with the Icelandic banks.

On the basis of legal advice received from the law firm Bevan Brittan (and each authority’s own analysis of the financial position) Icelandic krona (‘ISK’) owned by those councils but trapped in an escrow account in Iceland was sold to Deutsche Bank.

The proceeds of the sale were paid in pounds sterling, and bring to a close a long process of 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.

Bevan Brittan lead partner Virginia Cooper 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."

There remain a number of other authorities with some small sums still to be recovered.