Councils funds in collapsed banks

At least 100 councils are known to have deposited money in Icelandic banks

Cheshire County Council and Wirral Council are among scores of authorities whose funds are tied up in collapsed Icelandic banks.

More than £8m has been invested by Cheshire County Council in Heritable Bank, a subsidiary of Landsbanki, which has gone into administration.

Merseyside's Wirral Council has a £2.5m bond with the same bank.

The total invested by local authorities across England has now risen to more than £760m.

The amount invested by Cheshire County Council makes up around 4% of the local authority's total £200m investment with national and international financial institutions. It has a budget of £1bn.

Ian Callister, a council spokesman, said the local authority was liaising with the Local Government Association to find out whether the UK Government would give similar protection afforded to individual savers.

"While the money is apparently at risk because the bank has frozen all its assets, the situation remains highly complex and is changing daily," he said.

Pension funds

Wirral Council is hoping that its bond with the troubled bank's subsidiary will also be honoured and said that it would be "monitoring the situation".

Last year the council made £4m through investment activity, which it says was placed into reserves to ensure that local services would not be affected by changes in financial markets.

The council's £2.5m bond, together with a £5m bond with Glitnir Bank, is part of the Merseyside Pension Fund which provides pensions for local government workers including council staff across Merseyside and staff at Liverpool John Moores University and St Helens College.

In a statement released by Wirral Council, a spokesman for the pension fund said: "Merseyside Pension Fund has stringent risk controls in place which ensure that its investments are diverse, with limited exposure to any one asset class, market, sector or stock."