Icelandic banks

10 October 2008

Chelsea manages a highly diversified liquid assets portfolio within strict Board exposure limits. Our approach requires that investments are spread across a range of highly rated organisations (rated at least A at the time of the initial investment). This helps to spread risk. Within this portfolio, we have an exposure to two Icelandic banks totalling £55 million. We do not yet know if a loss will arise on these investments or, if a loss does arise, how much it will be and what the prospect of recovery would be.

It is important to place this position in context. Chelsea has total assets of around £14 billion. The total amount of our liquid assets investments is £3.5 billion, spread across well over one hundred institutions. The exposure to the two Icelandic banks is only 1.55% of the total portfolio.

Chelsea’s position is strong and, despite the potential for loss through these Icelandic bank exposures, we will continue to have more than sufficient capital and cash resources to operate our business as normal.