The Director of Finance provided a summary of the key messages from the Audit Commission report Risk and Return – English Local Authorities and the Icelandic Banks. The Audit Commission found that the majority of Councils had acted properly in managing their investments and were alert to the risks. Wirral Council was visited as part of the study and was considered to have acted properly. However, the report did make a number of specific recommendations for Local Authorities to help strengthen investment policies and further limit the risk of exposure to any future banking failures and the Director assessed current investment policies against each of the Audit Commission’s recommendations.

The Director also restated the background to the £2m investment with Heritable Bank and updated Members on the latest news from the Bank Administrators. Ernst & Young had begun the process of identifying and recovering assets and reimbursing the banks creditors, of which Wirral Council was one. It had reported that the assets exceeded the liabilities and had forecast that a material dividend would be payable in the near future. He anticipated that during April a report would be produced that would give more definitive information about the amount and/or timing of dividend payments. At this stage the Director remained confident that the £2m investment would be returned.

The Chair referred to misreporting of the issue in the local press and, in response to comments, the Director of Finance indicated that he expected the whole amount owing to be ultimately paid, including interest payments due on the fixed term bond.

Resolved – That the Audit Commission conclusion that the Council acted, and continues to act, properly in the management of its investments, be noted.