SOLIHULL Council has revealed it has £3 million invested in Iceland's crisis-hit banks.
The Solihull News understands that it has £1m invested in Landsbanki and a further £1m in Kaupthing, both of which have been nationalised by the troubled Icelandic government.
Meanwhile part-nationalised Glitnir has £1m of Solihull Council's money.
Solihull joins some 20 other local authorities with money locked in the Icelandic meltdown and at present it is unclear whether the money is lost, partially lost, or safe.
Solihull MP Lorely Burt has taken the issue up and is urging Chancellor Alistair Darling to back local authorities as well as personal investors to get the money back.
"It is absolutely essential that Mr Darling supports us because we are extremely cash- strapped already," she said.
Solihull is so short of money it recently sold a precious Constable sketch of Malvern Hall for £17,400.
Ms Burt added: "We need answers because £3m is at risk and that is a huge amount of money."
She added that the money deposited should have been a sound investment, a view echoed by the borough's cabinet member for resources, Councillor Ken Hawkins: "Solihull Council deposits money in a wide range of banks, taking independent investment advice and within strict guidelines, to spread any risk," he said.
"The three Icelandic banks that we invested in had an extremely low credit risk so we followed the right steps."
Coun Hawkins is also playing down any fears that public services may suffer as a result of the investment and stressed that the £3m only accounts for about one per-cent of the council's overall spend.
"We can reassure residents that frontline services in our borough will not be affected."