Savers with millions of pounds trapped in accounts held at Kaupthing, Singer & Friedlander (KSF) on the Isle of Man were thrown a lifeline last week when the authorities halted the bank’s liquidation

The Isle of Man High Court agreed to a petition from the Isle of Man government to stall the winding-up of the company while discussions took place between the UK Treasury, the Financial Services Authority and Isle of Man authorities.

It is understood that there are hopes a buyer may emerge or that the bank may be allowed to continue operating as a going concern, despite the UK goverment’s decision to freeze the assets of its parent company, the UK arm of KSF.

It emerged during the court hearing that depositors were withdrawing up to £40m a day in the days before its collapse.

The court’s decision was hailed as a temporary victory for the 10,000 UK customers with savings tied up in the bank: liquidation would ultimately result in their relegation to the bottom of a long line of creditors.

Alongside regular deposit accounts in KSF, thousands of investors have another £300m tied up in the bank after buying tax-efficient offshore bonds from insurance firms.

They were given little comfort when the Isle of Man authorities described their claims as “low priority”.

The insurance firms, which include Aegon Scottish Equitable, Axa, Royal Skandia and Prudential, invested in institutional accounts in KSF.

Unlike regular depositors who are entitled to £50,000 under the Isle of Man financial compensation scheme, those who invested in schemes through insurance firms would share in an overall maximum of £20,000 paid to each firm — not each investor.

Meanwhile, UK authorities are finalising a plan which may involve lending £3 billion to Iceland so it can repay UK depositors in Icesave, the online savings arm of Landsbanki, the failed bank.