by political editor Paul Francis

Kent County Council has resumed investing in the Spanish-based bank Santander two months after suspending deposits amid concerns about the country’s economy.

The council had temporarily stopped using the bank in May, saying at the time it was seeking assurances the UK arm of Santander was not being used to prop up its principal Spanish division.

Now it has restored the bank to the list of institutions the authority uses to manage millions of pounds of taxpayers’ money.

It has also emerged that KCC is investigating the option of using Canadian and Australian banks for deposits.

Cllr John Simmonds (Con), KCC cabinet member for finance, said the council was now satisfied the UK arm of the bank was insulated from its main division.

“We have looked at it every way to make sure they are ring-fenced and in some ways they are probably stronger than some of their UK counterparts. It is always difficult to balance safety with return,” he said.

Deposits are being made only overnight but the rate of return meant KCC was still getting a better deal than the interest being offered by the Treasury, he added.

Although the bank was downgraded by the credit rating agency Moodys in May, it was not below the the county council’s minimum threshold.

KCC, like many authorities, makes deposits in a range of different banks as a way of earning interest.

However, its approach has been more cautious since the crisis caused by the collapse of banks in Iceland, where it had £50m on deposit.

The council is on course to recover the money after a protracted legal wrangle and has now had £32.5m returned.