Much of the millions of euros invested by Holland’s local councils in Icelandic banks had been borrowed from the state-owned local authority bank BNG, the Telegraaf reports on Friday.

In total, councils and provincial governments have some €220m on deposit in Iceland.
The paper says it has been told that several councils borrowed money from BNG at 3% and then put it into Icelandic banks which were offering 5.25%. The money was destined for infrastructure and healthcare projects, the paper says.
‘You are not allowed to speculate with government money,’ BNG spokeswoman Charro Dammers told the paper. ‘But councils are free to put money they plan to use for projects like building new roads on to a deposit account.’
BNG has €66bn in outstanding loans to councils and other public organisations.
Council officials told the paper that their employers will now have to borrow more money to repay BNG should the Icelandic banks be unable to pay up.