By Daniel Hunter

The first £100 million of money recovered from collapsed Icelandic bank Landsbanki will be paid into council accounts this week.

The payment follows successful legal action, coordinated by the Local Government Association, to secure priority creditor status for UK local authorities following the winding up of Icelandic banks Lansbanki and Glitnir.

The payment, which is likely to exceed £110 million, represents the first instalment of the £413 million in local authority funds held by Landsbanki when the bank collapsed in 2008.

The LGA expects as much as 98 percent of the total to be recovered. Following the recent announcement about the sale of Iceland Foods, in which Landsbanki has a large stake, further cash is likely to be recovered over the coming months.

"The first £100 million instalment is fantastic news for local authorities and the residents they serve," LGA Chairman, Sir Merrick Cockell, said.

"This is the result of four years' of hard work on behalf of the sector and we are absolutely delighted that we have been able to help more than 80 local authorities recover a large amount of the money they are owed by Landsbanki.

"We will continue to work with the bank's winding up board on behalf of our members to expedite the remaining payments."

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