Magazine article Public Finance

Audit Commission Defends Decision to Place Deposits in Iceland

Magazine article Public Finance

Audit Commission Defends Decision to Place Deposits in Iceland

Article excerpt

The Audit Commission has defended Its decision to deposit £10m in two of the troubled Icelandic banks, as it emerged that several other public sector watchdogs had stayed clear of Investing in Icelandic institutions.

Michael O'Hkjgins, chair of the Inspectorate, told Public Finance that the commission's policy of investing tts cash balance across Institutions was the right thing to do.

This year it invested E55m in total, in 11 £5m tranches across a range of Institutions. One of these was placed In Landsbanki in April and another placed In Heritable Bank in July. Both organisations had an Fl credit rating at the time - the highest quality short-term rating from the agency Fitch. The total figure of EIOm accounts for around 4% of the commission's annual turnover.

O'Higgins said: 'We were being prudent and spreading our investment across institutions, so if we end up being caught out on a couple of them, then the majority of them end up being safe. Was that right? I think [It was].'

The commission would look at whether credit rating agency information was used properly or whether there were inconsistencies between ratings, O'Higgins said. …

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