Kent council wins £50m Icelandic banks battle

The council had £17m invested with Landsbanki, one of three Icelandic banks that failed

Kent County Council has said it expects to get back most of the £50m it invested in Icelandic banks following a victory in Iceland's Supreme Court.

The council had deposited £50m - more than any other public body in the UK - in three Icelandic banks which collapsed in 2008.

The court confirmed the council's status as a preferred creditor of two of the banks on Friday.

Councillor John Simmonds said he was delighted the waiting was over.

The £50m invested by the council represented £32m from its own reserves, £16m from Kent Pension Fund and £1m from Kent Fire & Rescue Authority.

The county council deposited £18m with Heritable, £17m with Landsbanki and £15m with Glitnir, all of which were forced out of business.

To date £11,086,000 has been recovered from Heritable and the council said it expected to recover 95% of its investment.

Following the Supreme Court judgement, the forecast recovery from Glitnir is now 100% and from Landsbanki 98%.

Under Icelandic law, preferred creditors should receive a full payout before any other creditors are paid.

'Real financial challenge'

The council said it expected very substantial payments within weeks.

"As we've maintained all along, [the council] will get most, if not all, of its deposits back," said Mr Simmonds.

"The return of these funds is very welcome at a time of real financial challenge for Kent."

The authority led negotiations on behalf of 123 UK local authorities which had deposits in Icelandic banks.

They include 10 London councils - Barnet, Brent, Bromley, Ealing, Enfield, Havering, Hillingdon, Newham, Sutton and Westminster - which were estimated to have deposited at least £139m between them.