A leading cancer centre could lose £7.5 million as more victims of Iceland's banking meltdown emerge.

The Christie NHS Foundation Trust in Manchester said £6.5 million was made up of charity donations while the remaining £1 million deposited with Kaupthing Singer & Friedlander had come from the NHS.

The money had been put aside to fund research and service improvements in the next five years, the trust said in a statement.

The Christie was shortlisted by the Health Service Journal for its hospital of the year award and will find out in December if it has won.

A spokesman for Monitor, the regulator overseeing England's 107 NHS foundation trusts, said another had £1 million in NHS cash in an Icelandic bank but services would not be affected.

Monitor refused to name the trust concerned, saying it had a right to confidentiality.

The collapse of Iceland's major banks also caught out the Chelsea Building Society, which has some £55 million invested in the troubled country.

Local authorities have around £1 billion tied up, while charities stand to lose more than £120 million.

More than 100 councils, as well as police forces, fire services and transport authorities, have deposits running into millions of pounds each in the crisis-hit institutions.

Treasury officials are in Reykjavik for talks to settle the dispute over the Icelandic government's refusal to guarantee the deposits of British savers.

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