A group of depositors who lost savings in offshore accounts with Kaupthing Singer & Friedlander, the failed Icelandic-owned bank, has hired one of London’s top class action law firms to help recover their money.

The group – which hopes to represent the interests of around 8,000 depositors that lost over £800 million – have appointed David Greene, a partner at Edwin Coe, to examine legal options.

Kaupthing Singer & Friedlander’s Isle of Man operations were frozen along with the rest of the Icelandic bank on October 8. But while the Government was quick to guarantee onshore savings, the group of offshore account holders says it was left out in the cold.

They have hired Mr Greene, who is representing shareholders in Northern Rock in a lawsuit against the UK Government, to examine a range of potential legal approaches to recovering their money.

Mr Greene said this will include examining what rights depositors may have in any liquidation, their right to compensation and whether they can challenge the Government via emergency legislation introduced before the collapse.

"At the end of the day depositors, many of whom have lost their life savings, are simply seeking the return of their money. We are here to help in that campaign,” Mr Greene said.

Depositors must decide if they wish to join the group action and are free to pursue their own legal avenues if they prefer.

The bank's future will be discussed at a court hearing in the Isle of Man which was due to be heard next week but which the depositors group believe is likely to be delayed pending negotiations between the Governments of the Isle of Man, UK and Iceland.

The collapse of Kaupthing, formerly Iceland’s largest bank, has triggered a series of legal disputes. A separate lawsuit is being prepared against Ernst & Young, the administrators of the UK operation, by 30 Isle of Man depositors who attempted to recover their savings before the Isle of Man branch was placed into provisional liquidation.

Their funds were caught by the UK Government's decision to order clearing banks not to process transactions involving Icelandic-owned institutions. Greg Latchams WRH, a Bristol-based law firm, confirmed it had been instructed to prepare a case.

Separately, the Icelandic Government has appointed Lovells to advise on restructuring the country’s financial sector. The Lovells team includes litigators examining potential legal redress.

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