Local councils have €250m at risk

Local government leaders are furious with finance minister Wouter Bos for suggesting they should only be allowed to put their reserves into the state-owned local authority bank BNG or the water board bank.

Bos made the comments on tv on Tuesday night after it emerged local and provincial governments have at least €250m invested in foreign banks which have run into financial difficulty or gone bankrupt.
Worst affected is the province of Noord-Holland which has almost €100m at risk – €78m with Iceland’s Landsbanki and the rest in the US.
A spokesman for the local authority association VNG told the Telegraaf that councils had not been reckless. ‘It is a question of failing supervision,’ he said, pointing a finger at the financial services watchdog AFM and the finance ministry.
Local authorities are required by law to put their cash into institutions with at least an A credit rating status, which Landsbanki had.
Junior home affairs minister Anke Bijlveld hopes to have a final list of local authority assets which are at risk by Friday.
Dutch economist Arnold Heertje told the AD that he does not believe local civil servants should be able to control such huge sums of money.
‘They don’t know what they are doing, putting money into Seoul or Iceland. It’s an unbelievable scandal that this is happening with public money,’ he is quoted as saying.

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