UK local authorities fear for Iceland investments

LONDON (Reuters) - British local authorities called on the government on Wednesday to protect investments made by at least 20 councils in Iceland's troubled Landsbanki.

The Local Government Association, which represents more than 400 councils in England and Wales, has written to Chancellor Alistair Darling to request a meeting.

The LGA wants the same assurance Britain has given to individual savers that all money invested in Landsbanki's Internet bank IceSave will be fully protected. Landsbanki was taken under Icelandic government control this week as the country moved to stave off national bankruptcy.

"We are today seeking an assurance from the chancellor that councils' assets will be protected in the same way as personal assets. Town halls invested in Landsbanki as a reputable bank with a solid credit rating," LGA chairman Margaret Eaton said.

"In the short term, these councils are confident that they will have sufficient funds to tide them over for a considerable period of time," she said.

The Conservative Party estimates local authorities in England and Wales have invested up to 40 million pounds in Icelandic banks, but there is no official figure.

Prime Minister Gordon Brown's official spokesman said the government was ready to meet with British local authorities.

"Of course we understand the issues in relation to local authorities and the government stands ready to sit down and discuss with local authorities any particular issues that may arise," he said.

"At the moment it is very difficult to get much, if any, information out of the Icelandic authorities