It has been revealed that Lancashire County Council has £10m, part of its cash deposits, invested in Landsbanki.

It had its assets frozen after the Icelandic government called in administrators earlier this week.

District councils in South Ribble, Chorley and Lancaster have also confirmed they have money tied up in the troubled country.
South Ribble has £5m, Chorley £2m and Lancaster £6m.

County Coun Tony Martin, the county council's cabinet member for resources and performance, said its cash had been lent to the stricken bank last month and was due to be repaid in December.

At that point, the authority hopes that it will become a "preferential creditor" and get its money back from the administrators or whoever has taken over Landsbanki.

He said: "We cannot say it will not affect front-line services, although we will be doing our level best to make sure that does not happen.

"Two things will happen, either we will have to go out and raise this money again or we are going to have to go to the hard-pressed council taxpayer for the money again, which is the last thing we want to do.

"What I do know is this is 2% of our overall investments which are in top-rated investment banks. Landsbanki was also a top-rated bank, it just ran out of money."

South Ribble Council finance chief Coun Colin Clark said it had £5m in Landsbanki and was now working with the Local Government Association (LGA) to press the UK government to protect its investments.

He said: "These investments provide significant income that contributes to our annual budget and helps keep the council tax low for local people. Investment is based on a regular risk assessment including independent specialist financial advice and follows national best practice among local councils."

Town hall chiefs at Chorley Council invested £2m with Scandinavian banking giants Landsbanki and the account was due to mature in December.

Coun Alan Cullens, Chorley's executive member for resources, said he was 'hopeful' there would be a positive outcome.

He said: "It is crucial for Chorley people to know we are doing everything to bring this issue to a positive conclusion during a very uncertain time."

Councils in Preston, Wyre, Lancaster, Fylde, Ribble Valley, West Lancashire and Blackpool had no money in Iceland.