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Icelandic banking crisis halts school building

Building work at some schools will be halted in the wake of the Icelandic banking collapse, it emerged today.

Fears have been raised of delays to Aberdeen's £120 million school building and refurbishment programme since its financial backer Landsbanki ran into difficulties.

The bank was seized by the Icelandic government last month and can now only provide part of the finance required for the ambitious schools programme in the city to stay on track.

Today councillors agreed to provide a loan of up to £5 million to allow some work to continue while the consortium behind the programme looks for a new backer.

The funding means that work already under way at four schools can continue.

But work which has already commenced at three primary schools will be suspended, leaving a possible delay of up to six months in their completion.

Building work has yet to begin at the three remaining schools involved in the programme.

Concerns were raised over the 3Rs programme to build or refurbish 10 city schools after Landsbanki was seized by the Icelandic government last month.

The development means Landsbanki is only able to provide a quarter - £7.5 million - of the finance to allow building to continue on schedule into next year.

The options on the table for councillors today ranged from a loan for the consortium of £3 million to one of £18.5 million - which would have seen all work continue as timetabled.