Town halls with cash frozen in two of Iceland's collapsed banks were this week told by CIPFA they should expect to receive all of the cash back. CIPFA also estimated that returns from the two other Icelandic banks in which town halls had invested should cover between 50% and 80% of their deposits. The news is likely to come as a relief to many finance managers, following months of uncertainty over repayments from the defunct accounts. One county council, Somerset, had more than 100% of its total reserves deposited in Icelandic accounts. At least 125 local authorities have £953m frozen in Icelandic accounts. Some of the deposits were made just days before the banks collapsed in October last year, and the crisis forced local government minister, John Healey, to introduce emergency accounting measures to ensure there was no impact on council tax. CIPFA local government expert, Alison Scott, said: ‘Councils are now in the position where they can estimate the scale of their losses with some confidence. With the new CIPFA advice, they can at last prepare accounts in a reliable and consistent manner.' After assessing announcements made by administrators for each collapsed bank, CIPFA expects the two Iceland-registered banks – Glitnir and Landsbanki – to return up to 100% of their deposits. The two UK-registered – but Icelandic-owned – banks – Heritable and Kaupthing Singer & Friedlander (KS&F) – will repay less. CIPFA expects Heritable to return between 70% to 80% to depositors, while ‘at least' 50% should be returned by KS&F. Kent CC has £50m in Iceland's banks – the largest amount invested by a council. Lynda McMullan, the county's director of finance, said: ‘We have long been confident that we would get most of our deposits back.'
