TWO district councils covering the Cotswolds still have around £1.3million of public money sitting in Icelandic banks, six years after their catastrophic collapse.

Three of Iceland’s largest banks Glitnir, Landsbanki and Kaupthing collapsed in 2008 while holding nearly £1billion worth of investment from over 100 local authorities.

The authorities have been repaid the majority of the investments but some money owed still cannot be accessed through currency restrictions.

Cotswold District Council had invested just over £2 million and has managed to recoup most of the investment. A spokesman for the finance department said the difficulty in securing the final amount (around £300,000) was because this portion of the money had been repaid in Icelandic Krona and was being held in a third party account, although it was actually earning interest while it was there.

Capital and currency restrictions were put in place to stabilise the Icelandic economy a number of years ago.

The spokesman said: "Icelandic Bank Glitnir made its repayment to creditors on March 14, 2012. The repayment made to Cotswold District Council amounted to 100 per cent of our claim and was made in five currencies: British pound sterling, Euros, US Dollars, Norwegian Krone and Icelandic Krona, with the proportion of Icelandic Krone being approximately 18 per cent of the repayment.

"All of the currency has been converted into sterling and received back into the council’s bank account except for the element which was paid in Icelandic Krona and is subject to currency restrictions within Iceland. This is being held in an escrow account (a temporary pass-through account held by a third party) with the new Glitnir bank, Islandsbanki. The council is awaiting the relaxation of currency controls by the Icelandic Central Bank."

West Oxfordshire District Council invested £9million in Icelandic banks. It has sold off part of the debt but is still owed just under £1million.

Strategic Director of the district council Frank Wilson said the council had also invested in Glitnir and received it all back apart from £774,000 which was also paid in Icelandic Krona and is in an escrow account in Iceland.

"We continue to work with the Local Government Authority and other public bodies to seek the best solution in the interests of West Oxfordshire taxpayers for a prompt return of outstanding funds," said Mr Wilson.

Gloucester County Council also has money waiting to be transferred.

Ray Theodoulou, cabinet member for finance and change at the county council said: “We’re pleased to have had £10.9million back from the £12.5million investment in Icelandic banks. An additional £1.5million has also been returned to us in Icelandic Krona, but the currency restrictions mean that we are currently unable to access the money. We are working to resolve the issue and when we do we can make a decision on how we spend the funds.”

Warwickshire County Council and Stratford District Council had no money invested in Icelandic banks.