The West Midlands regional public transport authority Centro has admitted having £4 million invested in a subsidiary of failed Icelandic bank Landsbanki.
But Centro, the organisation which promotes and develops public transport in the region, said that money tied up in Heritable Bank was strictly reserve funds and would have no impact on its operations.
A Centro spokesman said: “Centro can confirm that £4 million of its reserves are invested with Heritable Bank, a subsidiary of Landsbanki and this balance is frozen.
“Centro is working with the bank’s administrator Ernst and Young and the Local Government Association to ensure that taxpayers’ money is protected. Centro invests its money with various banks and building societies to minimise any risk, which is in line with best practice. Centro’s cash flow requirements can continue to be managed satisfactorily despite this frozen account.”
Centro’s admission swells the list of public bodies in the Midlands owning up to having cash tied up in Icelandic banks. Solihull Borough Council has £3 million, Tamworth Borough Council has £7.5 million and Wyre Forest Borough Council has £9 million invested in Icelandic financial institutions.
The Local Government Association is lobbying for the recovery of more than £900 million of local authority investments tied up in Iceland’s failed banks.
Earlier this month the Government is understood to have frozen £4 billion of Icelandic assets using anti-terror laws.
Kent County Council is the local authority with the largest amount of money invested in failed Icelandic banks.
Its cabinet scrutiny committee met on Wednesday to question the authority’s treasury team about the £50 million it has deposited in Landsbanki, Heritable and Glitnir Bank.
The council has said the £50 million it has invested in Icelandic banks represents only a relatively small proportion of its total budget of £2.6 billion. It stressed none of its services would be affected and its finances are robust.
Kent County Council leader Paul Carter has written to Alistair Darling suggesting that moving all public sector and charities’ investments to British banks would boost liquidity for UK banks.