MILLIONS of pounds invested by Oxfordshire councils in collapsed Icelandic banks will be repaid.

The five Oxfordshire councils with money tied up in two failed banks will get 98 per cent of the £21m they invested, after a nationwide bid to return funds was successful.

The Icelandic Supreme Court made the ruling for UK councils to have priority creditor status for failed Landsbanki and Glitnir, among the institutions to collapse in 2008.

Councils invested in the banks to get a high rate of return and the Local Government Association has been battling to get cash returned since.

Oxfordshire County Council had £5m in Landsbanki while Vale of White Horse had £1m.

West Oxfordshire District Council had invested a total of £7.5m in Landsbanki and Glitnir and Oxford City Council had £1.5m in Glitnir.

Cherwell District Council had £6.5m in Glitnir.

Lead member for financial management Ken Atack said: “We are delighted.

“This decision, which comes more than three years after the banks failed, is a huge victory.”

He added: “The cost of the litigation to date amounts to less than one per cent of the amount we expect to recover.”

It had previously been agreed through an out-of-court arrangement that a further £7m of Oxfordshire council cash two other banks would be repaid.