The council, which has £6.5 million invested in the Icelandic bank Glitnir, is working to sure residents are not affected by the crisis.

Councillor James Macnamara, portfolio holder for resources, said: "In common with many local authorities Cherwell District Council has investments in the Icelandic bank, Glitnir.

"The funds deposited with the bank are medium term three year holdings, placed in late 2006 and early 2007 with a value of £6.5 million.

"At this time Glitnir was considered to meet our AAA standard for investments. This represents six per cent of our £101 million investment portfolio.

"In keeping with best practice the council operates a prudent and robust low risk investment strategy. We utilise the expertise of professional independent advisors to guide all decisions and fully comply with HM Treasury guidelines.

"The council's financial standing remains sound and we will do our best to ensure the current uncertainty over the return of the investment does not adversely affect the services we provide to our residents."