West End letters: risks | investing in Icelandic banks

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West End Extra - LETTERS TO THE EDITOR
Published: 17 October 2008

Clear warnings on the risks of investing with Icelandic banks

WESTMINSTER Conservatives claim they only invested £17million of council taxpayers’ money in Icelandic banks because they say these banks had “the highest credit ratings”.
But is this so?
In February this year, Moody’s Investors Service cut its ratings on all the major Icelandic banks. Landsbanki’s long-term rating was downgraded “in light of the weaker credit environment”.
Six months ago, in May, Fitch, another agency, cut the ratings of Glitnir Bank and Kaupthing Bank. Standard & Poor’s said it had only rated one Icelandic bank, Glitnir, and had cut its rating from A- to BBB+ in April.
Indeed, as one credit agency spokesman said: “We have been highlighting a growing risk about the Icelandic banking system since February 2007.
“The rating BBB+ is very high risk for a western European bank.”
Those warnings were passed on to many local council financial managers, prompting some to stop investing in Iceland.
But why did Westminster Conservatives fail to act?
Why did they put £10million of our money in an Icelandic bank in August 2008, just a few months ago?
Just a year ago Labour councillors warned against the council chasing high interest rates by investing in “interesting” and “adventurous” ventures. We urged a cautious and prudent approach in the light of the Northern Rock crash.
Now, with £17 million under threat, Westminster residents are entitled to an explanation from the Conservatives as to where their money has gone.
CLLR Paul Dimoldenberg
Leader of the Labour Group
Westminster City Counci

Send your letters to: The Letters Editor, West End Extra, 40 Camden Road, London, NW1 9DR or email to letters@westendextra.co.uk. The deadline for letters is midday Wednesday. The editor regrets that anonymous letters cannot be published, although names and addresses can be withheld.
Please include a full name, postal address and telephone number.
Letters may be edited for reasons of space.

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