Manchester museum has nearly £1m in failed Icelandic bank

The Museum of Science and Industry (Mosi) in Manchester has revealed that it has £900,000 invested in failed Icelandic bank Kaupthing Singer & Friedlander.

Mosi is now taking legal advice to try and get the money back from the bank, which was put into administration on 8 October. The museum's director, Steve Davies, said the money was part of its reserves, not its core funding.

"We are completely solvent," said Davies. "The £900,000 is the result of two to three years of good trading. Mosi carries on as before and there is no question of redundancies."

Davies, who joined Mosi in August, said the £900,000 was earmarked for education work and it would not affect its plans to redevelop the museum. Mosi has about 120 permanent staff and attracted more than 800,000 visitors last year.

Museums Sheffield also has very limited exposure to the problem. Its director of finance and resources Mark Hilton said: "South Yorkshire Pension Authority, who offer a defined benefit pension scheme to ten of Museums Sheffield's staff, does have savings in one of the Icelandic banks.

"Should SYPA fail to reclaim those savings, Museums Sheffield, as the employer, may incur a very small increase to our contribution to cover the shortfall. No loss will be incurred by any individual member of staff."

It is not yet clear if the collapse of the Icelandic banking system will affect local authority museums. The Local Government Association (LGA) said there are nearly 120 English councils with investments in Icelandic banks totalling about £850m.

"All efforts are being made to get the money back and to make sure there is no impact on services," said an LGA spokeswoman.

Adrian Babbidge, of museum consultancy Egeria, said there are already a number of financial pressures on local authorities created by the financial crisis such as the loss of value on investments held by pension funds and increased costs for borrowing.

"Clearly, some councils, especially those with strong liquid assets, are in a better financial position to deal with these pressures than others, so at this stage it is impossible to make any general assessment," Babbidge said. "The real impact of the current crisis won't be felt until early 2009."

Local authority spend on museums is less than 0.2 per cent of local councils total expenditure, but Babbidge said: "These added uncertainties at the time of the annual budget round, when councils will also be reviewing their medium-term financial strategies, will clearly add to the pressures on museum budgets."