Councils which invested millions of pounds in Icelandic banks may get most of their money back.

Kent County Council was one of several local councils which had money invested in Icelandic banks when they were nationalised by the government in October.

KCC had £50million tied up with Icelandic banks, £17million with Landsbanki.

Other councils in Kent who invested in Iceland were Canterbury City Council (£6million) and Sevenoaks, Tonbridge and Malling and Dover, each with £1million. Kent Police Authority also had £10million locked into the banks.

Administrators for Heritable Bank, the UK arm of Landsbanki, have indicated its creditors could get up to 80 per cent of funds back.

KCC leader Paul Carter said he was very encouraged by the news.

He said: “We have received a full report from Ernst & Young, the administrators of Heritable Bank, that their projections indicate a return to creditors of the Heritable Bank of between 70 and 80 pence in the pound.

“This is in stark contrast to the recent gloomy predictions that creditors would only get between 0.5 pence and 9.5 pence in the pound.

“We, along with 122 other local authorities, the Audit Commission, Transport for London, the Metropolitan Police, Cambridge University, two health trusts and many others, had money in Icelandic banks.

“This is the first tangible result from the work we have done to get this money back, which could be returned to KCC from July onwards.

“In addition, the position developing on our deposits with Glitnir and Landsbanki is looking most positive.”