Councils out of pocket but insolvency professionals reign supreme
News has emerged that UK public sector organisations that pumped millions into the ill-fated
Icelandic banking system will at least see some return on their investment.
Merseyside Pension Fund and Wirral Council have seen 65% of their £2.5m and £2m deposits clawed back from Heritable Bank, a subsidiary of Landsbanki.
But uncertainty remains over whether another £5m of MPF cash lodged with Glitnir will
ever be returned. The fund holds the pension pot of thousands of local public sector workers.
All told 145 councils across Britain hurtled lemming-like into Iceland’s banks on the promise of high returns. The only check they made about the wisdom of this, was with credit ratings agencies who were all going along with the idea a tiny country like Iceland had banks that were suddenly global financial behemoths.
When the meltdown happened, billions were at stake.
Take Heritable Bank, a modest London operation that was a safe player until taken over by Landsbanski when risky mortgage loans overnight became all the rage.
The bank, with just 133 employees, ended up owing £1bn. Administrators in the form of Ernst & Young popped up to sort it all out.
They must have been rubbing their hands with glee. Despite attempts to reduce huge fees in the insolvency profession – profit out of misery – little has changed.
E&Y has to date creamed off £19m from Heritable’s failure – senior partners are on £721 an hour and even a trainee is billed at £149 an hour.
Some of Heritable’s executives are up to £300,00 out of pocket – shame that.
At least in this case the administrators will be able to recoup a big slice of money initially feared lost.
In many other cases that doesn’t happen yet they still walk away with millions. When will this particular gravy train be halted?l