"Cambridge could lose £11m invested in Icelandic banks" par Polly Curtis et Anthea Lipsett, "The Guardian", 15 octobre 2008

Cambridge University has revealed it stands to lose £11m that it had invested in savings accounts with the collapsed Icelandic banks, while other big universities are also faces substantial losses.

The government has confirmed that 12 universities had a total of £77m invested in Iceland.

A spokesman for Cambridge said it had £8.5m in the Heritable bank, a UK subsidiary of Landsbanki, and £2.5m in the bank Glitnir.

"Weíre not in position to fully determine how much of that we’ll recover," he said. "We’ve notified the funding council, and seek to coordinate recovery through them."

The £11m amounted to 3% of the university’s money-market deposits, he added.

The University of Oxford’s director of finance, Giles Kerr, said it had 5% of its "cash pool" in Iceland.

Kerr said he had contacted colleges who had money in the cash pool to explain the position. He said Oxford had "more than sufficient liquidity" to meet their requirements and it would make every effort to recover deposits in Iceland in full.

"This is clearly a difficult time across the economy, and no one is immune. However, the finance committee is monitoring the situation closely and we are taking all necessary and available steps," he said.

Manchester Metropolitan University also has £10m invested in the Heritable
bank.

A spokesman said : "We are hopeful that the authorities will secure the unfreezing of our assets, particularly in the light of John Denham’s assurance in the House of Commons on October14.

"We would like to emphasise that the freezing of these investments will not have a negative impact on the day-to-day functioning of the university. MMU remains a financially strong university, and will continue with its current development plans."

The Open University has an exposure of £6.5m with UK subsidiaries of Icelandic banks - Heritable bank and Kaupthing Singer & Friedlander - now under administration.

Repayments were due on October 13 (£5m) and March 2, 2009 (£1.5m).

Prof Brenda Gourley, OU’s vice-chancellor, said : "The funds at risk with these two banks, although significant, represent less than 4% of the university’s cash holdings and 1.5% of the university’s expenditure budget this year.

"There is no threat to the university’s operations and staff and suppliers will be paid as normal."

The announcement of Cambridge’s substantial investment is potentially embarrassing for the university - it appointed its first chief investment officer, Nick Cavalla, an investment professional with particular expertise in the management of alternative investments, in April 2007.

The university said at the time that it was creating the first professional in-house investment office of any UK university, and that it would help diversify the university’s exposure to financial risk.

The university had already set up an investment board of experienced industry figures to oversee management of the university’s endowment fund in 2006, with members including David Swensen, chief investment officer at Yale.

The Cambridge spokesman insisted the investment board had helped the university minimise its financial risk.

"It was all about diversification, and having a broad spread of investments to diversify risks. There’s no doubt the board has helped with that," he said.

"It’s a substantial amount of money [in Icelandic banks] but it’s only 3% of the university’s total money-market deposits."

The secretary of state for universities, John Denham, informed parliament of the losses in a written statement yesterday. It followed urgent enquiries by the Higher Education Funding Council for England (Hefce), which is responsible for university financing.

Denham wrote in a statement : "Hefce has informed the government that there are 12 universities which held deposits with Icelandic banks that have recently entered into administration.

"The total amount deposited was around £77m.

"Clearly, this is a serious matter for each of these universities, and officials from HM Treasury are engaging with them and Hefce about their concerns.

"However, it should be noted that Hefce has concluded that no university is at risk as a result of its exposure to Icelandic banks. Certainly, no university faces a level of exposure that would raise questions about its continuing solvency.

"Students, businesses, charities and others may deal with universities with exactly the same level of confidence as before."

Three universities in Wales also stand to lose £8.1m.