The Independent today (as part of a report about a favourable outcome for UK investors in Kaupthing) has worrying news about Glitnir Bank, which had its first creditors’ meeting a fortnight ago.  Stephen Jones, the finance director of the Local Government Association (LGA), attempted to have UK councils named as “priority” creditors rather than simply as “general unsecured” creditors, which would mean that councils could get back as little as 25 per cent of their money. In Landsbanki’s winding-up order, UK councils were made priority claimants.

Mr Jones seems (the report to the creditors is still confidential) to have failed so far, but a spokesman for the LGA said that nothing had changed since the December meeting, and that discussions were ongoing. The good news is that Neath Port Talbot had only£1 million invested in Glitnir. A possible loss of £750,000 is not to be taken lightly, but it could have been worse if either of the other two banks with which your council is involved had not been predicted to repay virtually 100%.

Legal action could still follow and the only certain winners from the situation are accountants and lawyers.

 [Update 2010-1-5: the President of Iceland has put on hold the legislation to repay the Icesave (not Kaupthing as a whole, as I wrote above) deposits. It can now only be saved by a positive vote in a referendum.]

 

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