£140m recovered from Landsbanki auction

Councils taking part in last week’s auction of Landsbanki claims recouped £140 million, according to the Local Government Association.
As exclusively revealed by Room151, the majority of councils still owed money by the failed Icelandic Bank took part on Thursday in an auction of their claims to distressed debt buyers.
The LGA said that the result of the auction meant that, overall, local authorities are expected to recoup more than 90p for every £1 put into LBI, Glitnir, Heritable and Kaupthing Singer & Friedlander before the financial crisis.
LGA chairman Sir Merrick Cockell said: “This settlement has enabled a number of councils to fast-track their recovery of money from LBI and avoid any risk of further loss.
“We can justifiably say that the tenacious efforts of local government working together to get this money back have paid off.”
Claims were sold to Deutsche Bank in its capacity as an auction agent. The LGA has decided not to reveal the number or details of successful bidders and individual settlements to local authorities.
Councils had £414 million deposited with LBI at the time of the crash. Prior to the auction, around £225 million had been recovered, which means that £365 million has now been recouped.
Of £1.05 billion deposited in the four failed Icelandic banks at the time of the collapse in 2008, local authorities are now expected to get just over £1 billion back, the LGA said.
The LGA and its legal representatives Bevan Brittan will now work with authorities who did not participate in the auction to settle their claims.
The timing and amount of further installment payments is unknown, and the sterling value of what is received will be affected by exchange rate fluctuations.
According to the LGA, the legal and administrative costs of last week’s auction for councils totalled under 0.4 per cent of the net proceeds received.
One council which took part in the sale, Nuneaton & Bedworth Borough Council, said that it has now recovered 93.2 per cent of the amount it originally deposited with Landsbanki.
In a statement it said: “The transaction removes all uncertainty surrounding the timing of potential future recovery, particularly given that the administration of the insolvent estate of LBI is likely to continue for several years and the fact that future recovery payments may be made in a number of currencies which is less advantageous to NBBC.”
It said it would now use the money received to support its services.