The £25m represented 2.5% of the council's total investments Nearly £12m which was invested in Icelandic banks could be written off by Somerset County Council.The authority had nearly £25m deposited in Iceland's banks when they collapsed in October 2008.
The Conservative-run council said losing £12m was its worse-case-scenario but it was hoping only £2.1m would be written off.
So far it has retrieved £5m from one of the three banks and another instalment is due in April.
The county council said it routinely invested extra cash - mainly reserves for building projects and day to day spending.
The money was spread across three banks - Landsbanki, Glitner and Kaupthing, Singer & Friedlander.
They were Iceland's three biggest banks, but they all collapsed in October 2008.
UK councils had about £1bn invested in them.
The Icelandic bank investments have been called the "thorn in the side" of Somerset County Council by Conservative councillor David Huxtable, the cabinet member for resources.
The council's waiting for a court decision on whether it should be a priority investor to have its money paid back from the other two banks. The verdict is expected in a few months.
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