COUNTY Hall officers say they expect to recover 20 per cent of the money caught up in Icelandic banks by the end of the month – but admit at least £1 million will be lost forever.

The update comes after Hertfordshire County Council admitted much of the £28 million of taxpayers' money caught up in the Icelandic banking collapse remains “at risk”.

The council today said the chances of recovering all the cash are becoming increasingly slim, saying a maximum of 83 per cent of the money is the best taxpayers can hope for.

In a report to county councillors, officers also admitted they are likely to face a fight to regain the cash.

In the report, County Councillor David Lloyd said the council had applied to the administrators of the failed banks to become “preferential creditors”.

He added no decision would be made for the next six to seven months, but it was likely that any decision in the authority’s favour “will be appealed against by other creditors”.

The council has also been dealt a blow after it was revealed more than £1 million will be definitely lost in the failed Landsbanki.

Councillors had expected between 90 and 100 per cent of the £9.5 million lost in the bank to be recovered.

Those estimates have now been scaled down to £8.3 million.

However, some of the deposits made in two banks - KSF and Heritable – are expected to be recovered by the end of July.

Speaking at a meeting of the county council's cabinet this afternoon, County Councillor Lloyd said the council had expected to receive less this month.

He said: “We were expecting ten per cent back in July. However, the latest update is that we will receive up to 20 per cent by the end of this month so things are pushing in the right direction.

“We will of course continue to push in that direction.”