THE INVESTMENTS of a number of prominent UK universities who had vested substantial sums in Icelandic banks are at risk following the collapse of the nation’s banks last week. The twelve universities, which include Oxford and Cambridge, are thought to be in danger of losing up to a combined total of £77 million if the current Icelandic bank crisis is not resolved.
Oxford University, which has invested a total of £30 million across three of the Icelandic bank’s subsidiaries, is at risk of losing five per cent of their overall cash deposits, while Cambridge could loose up to 3 per cent (£11 million), of their total market deposits.
The University of Manchester, Manchester Metropolitan University and the Open University also confirm that they at risk of losing their investments of £10 million, £5 million and £6.5 million respectively. The effect of the potential investment loss has also reached Welsh universities, with three colleges in that region being at risk of losing £8.1 million having invested in the same string of Icelandic banks.
Despite the major losses which the universities are likely to endure, the Higher Education Funding Council in England (HEFCE), in conjunction with the Universities’ Secretary, John Denham have stated that the future viability of the institutions will not affected by perished investments.
Adding that this crisis posed no direct danger to the solvency of any of the universities affected, Mr Denham advised that the course of business for these universities would continue as normal, stating, “students, businesses, charities and others may deal with the universities with exactly the same level of confidence as before.”
Mr Denham assured that the UK Treasury and HEFCE would make strong efforts to retrieve the universities’ funds, while the heads of the universities’ financial departments expressed their hope that their Icelandic assets would be unfrozen with the help of the Universities Department.
However the universities were keen to point out that despite the scale of loss that they may face, the current crisis does not negatively affect the running of the college on a day-to-day basis.
Vice-Chancellor of the Open University, Prof. Brenda Gourley, stated that the money, if lost, would not impact on workers or students of the university. “There is no threat to the University’s operations and staff and suppliers will be paid as normal.”
Iceland was the latest economy to take a hit in the global recession. Many of the countries’ largest banks had to be nationalised during the crisis. Iceland’s previously successful economy had attracted many British investors to invest funds in the country’s banks and financial centres.