Kent County Council could soon see some of the £50million it has tied up in Icelandic banks returned.

It is understood the administrators for one of the banks, Heritable, have indicated investors and savers can expect to receive at least 70 pence for every pound deposited.

KCC has £18million on deposit with Heritable, which is a UK-based subsidary of one of the banks. That includes £3.3million deposited a day after the council's financial brokers advised against further investments because an email was not read by a finance officer.

KCC is locked in a dispute with the Audit Commission, which branded it as 'negligent' along with other authorities, over its Icelandic investments.

Paul Carter, the Conservative leader of KCC is reported to have said the first payment from Heritable’s administrators is likely to be made within a few months.

He said: "The administrators from Ernst & Young have produced a very large report saying that their base case shows a return of 70p to 80p in the pound. They also say that, depending on market conditions, it could end up being more than that."

There has always been greater optimism councils with money locked into Heritable would see a return because of its status as a UK-based bank.

In addition to its £18million with Heritable, KCC has £15million on deposit with Glitnir and £17million with Landsbanki. Negotiations are continuing about councils' deposits with these banks.

Four other Kent councils have money locked into the three banks. They are Canterbury (£6million); Tonbridge and Malling, Dover and Sevenoaks (all with £1million.)