Welsh public bodies act over Spanish bank concerns
Some Welsh public bodies are pulling their money out of Santander UK because of the banking crisis in Spain.
It comes despite the company's assurances that their deposits are safe.
Supporters say those involved are being prudent but critics say it is not justified.
Welsh public bodies lost £74m when Iceland's banks collapsed in 2008, though some of that money has since been returned.
The decision to recover funds from Santander UK was uncovered by an investigation for BBC Wales' Dragon's Eye programme.
It found that all 22 local authorities and 10 Welsh universities have no funds invested in Spanish and Greek banks.
But it emerged that at least three Welsh universities and four councils had stopped doing business with Santander UK in recent months in response to the Spanish banking crisis.
They include Bridgend, Flintshire and Monmouthshire councils and Swansea, Aberystwyth and Glyndwr Universities.
Glyndwr University withdrew £1m from Santander UK in January as the eurozone crisis deepened. Aberystwyth University withdrew its funds last month.
Monmouthshire council said it had "reduced our exposure to Santander UK Ltd (UK registered branch of Banco Santander) to nil" in May.
Meanwhile, Gwynedd Council said it has not had any funds with Spanish banks in the last two years and only deposited cash with Santander UK on an overnight basis.
Santander UK which is a standalone business has said that deposits with it are safe because no dividend can be paid to its Spanish parent company without the approval of the UK financial regulators.
It also says Banco Santander is not in need of and has not received any bailout money from the eurozone nations, though other parts of the Spanish banking sector have received funds.
Critics warn that the run on Northern Rock in 2007- even though it was in no danger of collapsing after the Treasury and Bank of England backed it - shows what can happen when the public loses confidence in a financial institution.
The Welsh Local Government Association said councils are making prudent decisions based on sound financial advise.
But Prof Tony Travers, an expert in local government finances at the London School of Economics (LSE), disagreed with the approach that has been taken.
"I think public bodies looking at what is going on in the world probably feel a bit of their own anxiety," he said.
"But the truth is Santander is a well capitalised Spanish bank, and the British arm is a separate institution anyway."
Conservative MP Jonathan Evans who chairs the All Party Parliamentary Group on Financial Services at Westminister has dismissed those public bodies who have withdrawn money from Santander UK as "silly" for taking money out of a British bank because "it sounds a bit Spanish".
"Really what those institutions should be doing is taking the best of advice, certainly acting in a very prudent way, but at the same time, relying upon the new firmer regulatory arrangements that are in place," he said.