Millions of pounds of Powys taxpayers money invested in Icelandic banks could be retrieved, according to reports today.

Powys County Council is one of a number of British councils which had invested money in the banks, which collapsed in October last year.

Several banks in Iceland were taken over by the country’s authorities when the nation’s financial system seized up, trapping about £800 million of UK local authority funds.

Powys had about £4 million invested.

Reports today said the administrators for one of the banks that collapsed, Heritable Bank, have indicated its creditors could receive about 80 per cent of their funds back – equating to a total repayment of about £300 million.

John Evans, Powys County Council communications manager, said it was too early to say whether it was good news.

He said: “We are aware of the announcement, but no formal details of what it means for Powys have been released to us as yet.

“On the face of it, it is good news, but it is too early so say for definite because we don’t know what implications it will mean for the council.”

Councillor Viola Evans, council chairman, said: “If this is the case then I am delighted. I would love the money to be put back in the coffers and we can then re-invest it into front-line services.

“I think this sounds like some good news and hopefully we can now benefit from getting the money back.”

Earlier this month a review found council finance bosses in Powys became “complacent” over investments and there were “weaknesses” in the system.

The council had the money invested in two Icelandic banks and is losing interest totalling £250,000 per year.

The council’s scrutiny review panel’s draft report said the council invested £1 million in Landsbanki just a month before it went into receivership. It already had £3million invested.

Last month the Audit Commission said a number of local authorities “negligently” deposited almost £33 million in Icelandic banks in the final days before their collapse.

The commission found seven English authorities breached official guidance.

By Andrew Morris