The UK’s third biggest fundraising Jewish charity retains hopes of eventually recovering £375,000 that was caught up in the Icelandic banking crisis.

JNF UK deposited the money with a UK subsidiary of Iceland’s Kaupthing Bank, Kaupthing, Singer and Friedlander, which went into administration last year.

Samuel Hayek, JNF chairman, said: “We have had confirmation from the administrators that at least 60-75 per cent will be recovered. But we are hopeful that all the money will be recovered.”

But £375,000 has been set aside in the charity’s reserve to offset any loss, according to the JNF’s newly published accounts for 2008.

The documents also reveal that the charity has started legal action against a donor, following its now resolved dispute with Keren Kayemeth LeIsrael in Israel, which cost the two organisations around £4 million in lawyers’ bills.

“The JNF received an undertaking from the donor to reimburse the JNF for its legal fees,” the accounts state. “The donor had not paid what was due and, based on advice, the board has commenced legal proceedings to recover the money.”

The amount in question is understood to run into hundreds of thousands of pounds.

Mr Hayek said he was “pleased” that the JNF’s overall income of £15.6 million last year had remained close to the previous year’s tally of £15.8 million, given the “turbulent period” of its conflict with KKL. He took over as head of JNF early last year with a mandate to resolve the dispute with KKL.

But the accounts also reveal that one of the charity’s flagship events, the London-Jerusalem car rally, lost £150,000 last year, despite a gross income of £372,000.

Mr Hayek said that the car rally might be reinstated, “but not in the near future. The policy of the board is not to promote loss-making projects.”

Future plans include a relaunch of the famous JNF blue box which had become “marginalised”, the board felt.

The board has been joined by educationalist philanthropist Benjamin Perl to oversee its expanding education work.