Council braced for Icelandic loss

The council had put about £10m in the Icelandic banks

A Scottish council has warned it may have to make service cuts if it suffers a £2m loss on its investments in two Icelandic banks which crashed.

Scottish Borders Council had £10m with Heritable and Landbanksi but now expects only £8m of it to be returned.

Finance spokesman Neil Calvert said the authority needed to be allowed to borrow to cover that shortfall.

He said that would allow the authority to spread the financial impact of the loss over a period of about 15 years.

"It is an estimate of the potential loss at this moment in time," said Mr Calvert.

He said it could be tackled in two ways.

"It can be addressed through the budget and that would have an impact on services," he added.

"But hopefully it can also be addressed through capitalisation - that is just spreading the risk and spreading the recovery over a longer period."

He said that second option would keep the impact on council services to a minimum.