Thirty charities that have funds deposited in the collapsed Iceland-owned bank Kaupthing Singer & Friedlander (KSF) are demanding the government underwrite their £47m, even though the government itself is owed 75 times as much after bailing out other creditors.

The charities, which have formed an action group named Save Our Savings, led by Cats Protection and Naomi House Children's Hospice, have secured representation on the KSF creditors committee to fight for the return of around £47m they collectively had invested in the bank.

At yesterday's creditors meeting in London, the coalition attracted enough votes to bag one of the five seats on the creditors committee. The other four places went to the Financial Services Compensation Scheme (FSCS), Transport for London, the trustees of the KSF Ltd Pension Fund, and Peterborough City Council.

Around half of the money tied up in the bank, some £2.6bn, was held in 170,000 Kaupthing Edge accounts - recently-launched online accounts for retail deposits taken up by individuals and small businesses, mainly.

It was revealed at the creditors meeting that the Treasury had ordered that this amount be rescued by the FSCS, and the accounts transferred to Dutch bank ING Direct. This meant the identity of those KSF creditors switched from individual account-holders to the FSCS.

This left a further £2.6bn in non-Edge accounts - around 2,000 accounts held by charities, local authorities, universities, private companies, and others.

Total claims top £4.7bn

Administrators confirmed that claims submitted for the purposes of the creditors meeting, plus estimates of future claims, totalled £4.722bn.

The largest claim is from the FSCS, estimated at £3.5bn, while subsidiary company KSF Isle of Man claimed £600m, the pension fund trustees £60m, the charities £47m, and local authorities "tens of millions".

Cats Protection chief executive Peter Hepburn (pictured) told Charity News Alert after the meeting that securing a place on the creditors committee was an important first step, but the coalition would also now be pressing the government for a commitment to a full refund of their money.

'Full government compensation'

"The government has decided to compensate the Edge account holders because they didn't want retail depositors - people like you and me - to lose out. They've not yet decided to support charities in the same way, yet charities are using money from the public, and our supporters are very keen that the government does give us full compensation."

Hepburn added that it was not just the FSCS that was involved in the bailout, because the Bank of England had loaned the FSCS the money to fund it. "What about the interest on that loan - will that take preference over other creditors?

"With the Bank of England, HM Treasury, the FSCS and the Financial Services Authority, the government is wearing four different hats just for this bit of it,"Hepburn said. "We want them to cut through all that and just give us an assurance that we will get all our money back."

Some dividend expected

The administrators said they expected they would be able to pay out some money to the creditors once the administration process was over, but it would too early to give even a range of figures that might become available. Currently, the administrators were holding funds totalling £270m, 55m euros and US$130m.

Joint administrator Maggie Mills of Ernst & Young said the administrators would work with the creditors committee to unlock funds as they became available, rather than releasing one large dividend at the end of a long process. But she declined to give a timescale, other than it being expected to take "months rather than days and weeks".

And she dashed any hopes that the charities would get any preferential treatment, despite pleadings from Naomi House chairman Professor Khalid Aziz as to the "supreme disadvantage" faced by the charities.

In response, Mills said: "We will go after the assets of the company in the normal way that we would be expected to do."