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Should we have sympathy for investors in Iceland?

Were the people who got caught out in Iceland asking for trouble? You tell us.

Published on October 16th 2008.

Should we have sympathy for investors in Iceland?

The Results..

Yes: - 54%
No: - 46%

The University of Manchester, Bolton Council and now the Museum of Science and Industry (MOSI). Who next?

News broke today that the MOSI is amongst many charities to have invested in the knackered Icelandic bank Kaupthing Singer & Friedlander Ltd (aka Crapthing Sacked & Slaughtered).

Steve Davies MBE, Director of MOSI (Museum of Science & Industry) has revealed that £900,000 of Museum savings have been invested in the bank, which was placed in administration last week. This had been earmarked for developing the Museum’s education programme, and other potentially important heritage projects. So it’s a big bloody body blow.

But should we feel any sympathy? As John Nuttall wrote on Property Confidential yesterday someone will always come up with ‘a whizzer scheme for ‘investing’ funds at an unbelievably high rate of interest. This always ends in tears.’

Vote yes for sympathy

No if you think these people were chasing fools’ gold like fools

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18 comments so far, continue the conversation, write a comment.

PaulOctober 16th 2008.

I think it's a bit unfair to lambast these institutions for investing in banks such as Kaupthing. It's easy to criticise in hindsight but realistically, who could have predicted this whole mess two years ago? These were reputable banks operating out of one of the world's best performing economies, offering attractive interest rates.

Tax PayerOctober 16th 2008.

The issue is not the choice of financier - more that these organisations, run in the public good, supported through the public purse, are squirrelling money away to the tune of several-£m, yet pleading poverty to their benefactors and customers.

PaulOctober 16th 2008.

Fair point, and I think this has exposed a lot of that.

Icelandic InvestorOctober 16th 2008.

I stand to lose £20,000 in an Icelandic bank that I stuck some savings in to take the 'benefit' of the 7% interest they were paying at the time. Is the government going to champion MY cause to get my money back as it is for these councils etc that have HIDDEN (from customers) secret funds in the same bank?? I suspect not.

DrakeOctober 16th 2008.

Who were you with IceInvestor? Kaupthing, Heritable and Icesave investors have all been guaranteed their money by the UK government. If it was offshore (ie Landsbanski Guernsey) then why on earth should the UK government protect you?

BolloOctober 16th 2008.

Icelandic Investor, i think you are covered as it happens

AnonymousOctober 16th 2008.

I'm not sure its safe to accuse these institutions of "squirrelling" money away, for ANY institution, whether a charity, public body or otherwise, cash management is an important part of their overall strategy, and just because they have cash on hand, does not mean they dont need to raise more money for projects and causes. In fact, maintaining a cash balance allows them to deal more effectively with the cyclical nature of business.These banks offered a good proposition for the management of cash which generated returns *SAFELY* at a far better rate than their counterparts in the UK.Unfortunately, it comes down to poor forward planning that this money was not shifted, and often because banks will "tie" the customer into fixed deposit terms and so forth. Additionally, remember that these organisations (councils and charities) may have even used this cash as leverage for other necessary projects (such as capital projects) making it difficult to move.These are tremendously complex times for the industry,and to take a 'tabloid' and 'sensationalist' attitude to it simply is not appropriate. Suffice to say that governments and heavyweight financial institutions are doing their level best to protect and extract these funds.

AnonymousOctober 16th 2008.

Thats a wonderfully utopian view - however the difference between working capital and £50m in 'savings' when poverty is being claimed, services cut and inflation x 3 prise rises forced on customers is as wide as the hole in the Icelandic banks accounts. It is no better than claiming the housing benefit when you have £100,000s in savings.

PaulOctober 16th 2008.

Which institution had £50m in savings? And which institution was pleading poverty? Fundraising and applying for government grants isn't pleading poverty.

AnonymousOctober 16th 2008.

you must also remember that councils and other bodies have to buy services on the open market, they are not immune to commodity and other increases. Also, they have LONG TERM objectives which require significant amounts of cash both from their savings and ALSO from the continuing cash-flow provided by the public. These organisations exist in a massively regulated and scrutinised world, it is unlikely that they could operate in a matter which is not in the broader public interest (whether or not we agree with their policies is secondary to this) and because of the nature of these 'organisations' the typical accounting principles of working capital and so forth take a very different light, so what may be considered excess cash for a 'typical' company, may be a requirement for other things for a council etc.... I think to assert they were 'pleading poverty' is a bit of an exaggeration. If we commissioned a private company to look after a WHOLE city, employing as many people, providing as many services, and paying as many benefits/etc they would, no doubt, have similar requirements for new cash, and similar cash locked away.----Here is what different authorities, charities and public bodies have invested in Icelandic banks, either in Iceland or UK subsiduaries.:: Barnet £27m:: Bassettlaw District Council £8m:: Bolton Council £6m:: Braintree District Council £5m:: Breckland District Council £12m:: Brent £15m:: Bridgnorth District Council £1m:: Brighton and Hove City Council said it suspended transactions:: Bristol City £8m:: Bromley £5m:: Buckinghamshire has £5m:: Burnley Borough Council £1m:: Caaerphilly County Borough Council £15m:: Canterbury City Council £6m:: Carmarthenshire County Council £4m:: Ceredigion County Council £5.5m:: Cheltenham Borough Council £11m:: Cherwell District Council £6.5m:: Cheshire County Council £8.5m:: Chorley Borough Council £2m:: Cornwall County Council £5m:: Cotswold District Council £2m:: Daventry District Council £8m:: Derwentside District Council £7m:: Dorset County Council £28.1m:: East Ayrshire £3-5m:: East Lindsey District Council £4m:: East Renfrewshire £1m:: East Staffordshire Borough Council £1m:: Exeter City Council £5m:: Gateshead £4.5m:: Gloucester City Council £2m:: Haringey:: Havering £12.5m:: Hertfordshire County Council £17m:: Hillingdon Council £20m:: Ipswich Borough Council £2m:: The Isle of Man government has a number of short-term deposits and long-term investments with Kaupthing Singer & Friedlander but has no figure yet:: Kent £50m:: Kinross £1m:: Kirklees Council £1m:: Lancashire County Council £10m:: Lancaster City Council £6m:: Lewes District Council in East Sussex £1m:: Monmouthshire County Council £1.2m:: Moray Council £2m:: North Ayrshire £15m:: North Ayrshire Council:: North East Lincolnshire £2.5m:: North Lincolnshire £5.5m:: North Somerset Council £3m:: Northumberland Council £23m:: Nottingham City Council £41.6m:: Nuneaton and Bedworth Borough Council £3m:: Oxfordshire councils £28.5m:: Perth and Kinross Council £1m:: Plymouth City Council £13m:: Powys County Council £4m:: Redcar and Cleveland £6m:: Restormel Borough Council £4m:: Rhondda Cynon Taf County Borough Council£3m:: Rushmoor Borough Council £2m:: Solihull Metropolitan Borough Council £3m:: Somerset County Council £25m:: South Hams District Council £1.25m:: South Lanarkshire £7.5m:: South Ribble Council:: Stroud District Council £3m:: Surrey County Council £20m:: Sutton £5.5m:: Tewkesbury Borough Council £1m:: Transport for London £40m:: Wakefield Council £9m:: West Lindsey £7m:: West Sussex County Council £12.9m:: Westminster City Council £17m:: Wiltshire County Council £8m:: Winchester City Council £1m:: Wirral Council £2m:: Wychavon District Council £1.5m:: Wycombe District Council £2.5mPolice authorities:: Dorset £7m:: Dyfed-Powys £2m:: Gwent £1m:: Hertfordshire £3m:: Humberside £5.75m:: Kent £11.1m:: Lancashire £0.67m:: Metropolitan £30m:: Northumbria £3.5m:: South Wales £7m:: Surrey £1.5m:: Sussex £6.8m:: Thames Valley £5m:: West Midlands £5.4m:: West Yorkshire £6mFire Services:: Strathclyde Fire and Rescue service £3mCharities:: Cats Protection League £11.2m:: Naomi House children's hospice in Hampshire £5.7m:: The National Council for Voluntary Organisations (NCVO) said British charities have £120m:: The Charity Finance Directors' Group said at least 10 charities had £36m invested:: The Physiological Society in London £523,000:: Samaritans have links to KSF

rosieOctober 16th 2008.


AnonymousOctober 16th 2008.

Kent Council had £50m, they (and many others) justified increases of sewveral time inflation by blaming significant financial pressure and claiming they would face a financial loss if they didn't enforce such vital price increases. Kent also applied for emergency funds last year...! I would say that was pleading poverty Paul!!

AnonymousOctober 16th 2008.

If we had a private business running cities, they would be being lambasted every step of the way for reducing services, increasing prices, employing nepotistic policies, corruption, forming cartels, acting in a way that benefited themselves at the cost of their customers, paying ‘execs’ too much, giving themselves special privileges and treatments, wasting money etc etc etc They would however be run a lot more efficiently, waste less resource and maybe genuinely listen to their customers and act in the public interest.

AnonymousOctober 16th 2008.

Anonymous - As citizens and rate payers, we see a certain side of council and public sector objectives, and we notice (naturally) the short term negative changes in more detail. Public sector bodies, while hardly free from problems, have LONG TERM objectives for their regions (often outside the scope of the lifetimes of many of the residents of those regions).Companies exist in competitive environments where it is necessary to take immediate response to customer needs, whereas public bodies do not have the same competition, but have 'best practice' guidelines.If you need to see this in action, just take a look at the changes in our own city over the last 25 years where many good things have happened, much to the short term lament they caused as changes were 'in progress'.No system/body is perfect, no company or council is perfect, and it is our duty as citizens/customers to always raise these things, but we must do so with pragmatic eyes and the understanding that these changes cannot happen with the speed which we want.

JohnOctober 16th 2008.

Paul: "It's easy to criticise in hindsight, who could have predicted..?" actually two of the major credit referencing agencies downgraded all Icelandic banks as long ago as the beginning of this year and councils were informed at the end of January. They were presumably "working towards" taking notice

PaulOctober 16th 2008.

To be fair John my point was who could have predicted this two years ago. The banks were downgraded in January this year, and most of the deposits in question weren't in instant access savings accounts - the majority were tied up in long term investments with no short term get out.

AnonymousOctober 16th 2008.

Nice 'LONG TERM' excuse there....but whenever such schemes come through, they onus is placed on increasing business taxes, council taxes, governmental handouts, etc etc etc. With council services running at a dreadful level and being cut further and further - to have stockpiles of cash is outrageous and flying in the face of being a public service. I get the income and expenditure accounts for my home and business councils. It always seems to show an exact zero-profit statement, with no mention of syphonoing off £XXm in reserves - nor is there mention of interest received...!

AnonymousOctober 16th 2008.

...west sussex (first example found when googling "council accounts")www.westsussex.gov.uk/…/?asset_id=3106767"The… County Council generally receives funds ahead of spending, and so has significant cash surpluses. These are invested with banks and building societies in strict compliance with the CIPFA Treasury Management in the Public Services Code of Practice and the County Council’s Financial Regulations. During 2007/08, the County Council had an average amount invested of £251.2m of which the majority was short-term fixed-rate deposits, although £9.2m of new long-term deposits were made during the year at higher rates of interest.""The total interest earned through investments in 2007/08 was £14.8m. This represents an average interest rate of 5.88%. This exceeded both the average base rate (5.54%) and the Barclays Money Market Fund benchmark rate (5.83%)."full details on the code of practice available secure.cipfa.org.uk/…/CF013_similarly..>&#62…; www.greenwich.gov.uk/…/ccounts_2007_8_pt1.pdf>&…; www.croydon.gov.uk/…/fa08.pdfall… clearly discussing the reserves they had on hand...

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