15 Oct 08

The University of Oxford has welcomed the engagement of the Higher Education Funding Council for England (HEFCE) in the issue of the higher education sector’s exposure to the Icelandic banking crisis.

The University’s Director of Finance has written to HEFCE urging it to do all in its power to help protect the higher education sector from the impact of the crisis.

The Director of Finance, Giles Kerr, sent the letter to HEFCE, which is the regulator of universities in England, following extensive consultations.

He said: ‘It is important that we get co-ordinated action and I know that HEFCE, DIUS and the Treasury are well aware of the challenges faced by the sector. We expect them to do all they can to protect the position of higher education institutions, which are vital to the country’s future prosperity.’

The University’s own exposure in Iceland is about five per cent of its overall cash pool, which in itself represents only a small part of the collegiate University’s overall wealth.

Mr Kerr said he had contacted colleges who had money in the University cash pool to explain the position. Mr Kerr said that colleges should be assured that the University’s cash pool has more than sufficient liquidity to meet their requirements. He also said that the University will make every effort to recover deposits in Iceland in full.

Mr Kerr added: ‘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.’

The University has made no Icelandic deposits in the last 18 months. The existing ones were made with institutions with fully assessed and approved creditworthiness. Iceland was rated AAA (the highest credit rating) at the time the investments were made. The fixed-term contracts have maturity dates between next month and next June. University policy has been, and is, to have a wide a portfolio of deposits in order to spread risk, and to review them regularly.