A fuller picture is emerging as to how millions of pounds in assets from Kaupthing Singer and Friedlander (Isle of Man) were placed with the bank's United Kingdom operation, only to be trapped there when it was put into administation.

Chief Executive of the Financial Supervision Commission John Aspden has described how funds were switched from Reykjavik to London when the liquidity of the Icelandic bank was called into question.

But 'the gate came down', the funds were frozen in the UK, and are now effectively trapped there.

Political and legal moves are underway to have them returned.

Mr Aspden (pictured) says the FSC made a crucial decision in the bank's best interests, but could not have foreseen the outcome

He also says all creditors have to be treated equally and the Isle of Man can't expect to be a priority:

"The idea of just lifting out assets from London and repaying them to the Isle of Man, whilst appearing very attractive, could mean that the Isle of Man would be getting priority.

"I know that lawyers are looking carefully at the basis on which funds were placed with the London bank, to see whether such a segregation or prioritisation might be justified, but at the moment I think it's premature to presume that could happen."

Transcription of separate extract taken from the same interview:

"With the benefit of hindsight it might have been better originally if the deposits had come back from Iceland and not been put in London, but at the time this was something that we had discussed with the regulatory authorities in London. They were placed with a bank in London for deployment within regulatory norms, so I think it was a prudent decision.

"(It's) easy to look at with the benefit of hindsight, but at the time no one obviously knew what was going to happen."