On this Day....
1991: Bank collapse costs taxpayers millions The closure of the Bank of Credit and Commerce International has lost about 20 local councils up to £30m in investments. BCCI was forced to shut its doors by the Bank of England last week amid fraud allegations. Councillors from Scotland to the south-west of England fear that poll taxes will have to be raised to offset the losses. BCCI remained on the most recent list of investment banks approved by the Bank of England and circulated by the Department of the Environment just over a fortnight ago. Council losses range from £6.5m in Bury to £0.6m in Bristol. In the borough of Bury, Greater Manchester, the sum accounts for all surplus money that the council has saved for investment over several years.
He continued that the authority would be "absolutely crippled" if they had to make up the deficit themselves. None of the BCCI's former customers are aware of how much, if any, compensation will be paid to them, but current insurance schemes set a limit of £15,000. In spite of criticism from both sides of the Commons, the Treasury has already confirmed that the councils will be treated in the same way as other unsecured creditors. Councillors estimate that it could cost tax payers an extra £50 a year in poll tax to recoup the money. The Association of District Councils is writing to all of its 300-plus members to confirm the full extent of the losses. A wide variety of local authorities have already confirmed that they are affected, including 11 English district councils, three metropolitan districts and two Scottish districts. Some, like York, have invested with BCCI for several years, but others, like Allderdale had only placed funds there in the last week.
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