TFL - Transport For London's Lost £40M in KSF

Fingers crossed on Finance - TfL's £40m deposit with UK bank owned by Iceland's largest bank

TfL had no off-shore deposits with banks in Iceland.

On 9 June 2008, TfL deposited £40m with a UK bank, Kaupthing Singer & Friedlander (KSF), which is authorised and regulated by the UK Financial Services Authority (FSA). Its ultimate parent bank is Kaupthing Bank in Iceland. The deposit matures in June 2009. At the time the deposit was placed, Kaupthing Bank carried an A1 credit rating (which remained unchanged until 9 October 2008). The placement with this UK bank was in full accordance with TfL's Treasury Management Strategy drawn up in the light of central Government guidance.

On 8 October 2008, KSF was placed in administration by the UK Government/FSA to protect the assets of the bank given problems affecting the Icelandic parent bank. It is understood that KSF has "substantial assets" and that the aim is to return KSF to normal trading. Under those circumstances, TfL would expect to get its money back when the deposit matures in June 2009. The Administrator is aiming to make an assessment of the asset position by the middle of November and TfL is in discussions with the Administrator regarding joining the creditor committee. Given the unforeseeable nature of recent events and that TfL's Treasury Management Strategy was consistent with central Government guidance, TfL expects to receive full Government support in relation to this matter. None of this will affect front line transport services or the billions being invested to upgrade London's transport.