A LOCAL council is confident it will recover the lion's share of the millions of pounds it had deposited in failing Icelandic banks.

Redcar and Cleveland Council was facing losses of £4m following the collapse of the Icelandic banking system in October last year.

But it has been announced that investors could recoup up to four fifths of their cash from one of the collapsed businesses Heritable Bank.

Councillor Peter Scott, the council's cabinet member for corporate resources, said: "We have always been confident we would get the lions share of our money back, it shows the security of councils procedures of having money in 14 different institutions."

Last month the Audit Commission said a number of councils negligently deposited almost £33m in Icelandic banks in the final days before their collapse.

The commission found seven English authorities breached official guidance and their own treasury management protocols in continuing to invest in Iceland after the banks credit ratings were downgraded below acceptable levels.

The chairman of the Local Government Association, Margaret Eaton, said: "This first step in getting council money back from the Icelandic banks will be a relief to taxpayers.

"The LGA, working with councils, has always expected to get the lions share of this money back and is continuing to work flat out to make sure that the council tax payer is top of the list for repayment."