Oxford University has £30m stuck in Iceland

Costly error: Oxford University has £30m tied up in Icelandic banks

Nicholas Cecil, Political Editor @nicholascecil|Chief Political Correspondent

13 April 2012

THE full scale of the Iceland bank crash's impact on British institutions was emerging today.

Oxford University revealed it had £30million deposited with three stricken Icelandic banks, Landsbanki, Glitnir and Kaupthing Singer and Friedlander.

The sum is far bigger than other universities' exposure.

Embarrassingly for the local authority spending watchdog, the Audit Commission, it was also reported to have millions of pounds frozen in Reykjavik banks.

The Financial Times suggested the figure could be as high as £10million.

The revelation comes after emergency teams were sent into three local councils facing financial difficulties because they have cash blocked in collapsed Icelandic banks.

Uttlesford district council said it would receive help from one of the financial teams.

The council, which has its headquarters in Essex and covers Saffron Walden, Dunmow, Thaxted and Stansted, has £2.2million deposited with Landsbanki in a one-year deposit which expired yesterday.

"Our annual budget is £10.2million and our current forecast shortfall on the 2008/09 budget is £200,000," said a spokesman.

"We are not able to spend the money deposited with this bank because Government rules prevent us from doing so."

Plymouth City Council, which has £13million tied up in three Icelandic banks, has revealed it is to borrow an extra £9million to make up for a budget shortfall this month.

An emergency team also went into Wyre Forest District Council in Worcestershire.

The town halls are among 13 which have said they may face short-term problems although ministers insisted there was "no reason to think that wages will not be paid or that services could be at risk".

The Local Government Association has identified 116 local authorities with £858million invested in the banks.

Around a third of this sum could be recovered from the assets of Icelandic banks frozen in the UK.

Administrators Ernst & Young, however, said it would be mid-November before it could estimate accurately how much could be recovered from the British operations of the Kaupthing and Heritable banks.

20 INSTITUTIONS WITH FUNDS AT RISK

Transport For London: £40 million

Metropolitan Police: £30 million

Kent county council: £50 million

Haringey council: £37 million

Barnet council: £27 million

Newham council: £7 million

Surrey county council: £20 million

Hillingdon council: £20 million

Westminster council: £17 million

Brent council: £15 million

Sutton council: £5.5 million