English universities face losing £77 million invested in Icelandic banks that collapsed last week, according to the Higher Education Funding Council for England.
Hefce said that "about a dozen" institutions were affected.
It is unclear whether the cash will be recoverable.
As Times Higher Education went to press, the Scottish Funding Council was not aware of any Scottish universities with deposits in Iceland, while the Higher Education Funding Council for Wales said three Welsh universities had deposits in Iceland worth £8 million.
The Open University has confirmed that it has £6.5 million deposited in two Icelandic subsidiaries. Brenda Gourley, the vice-chancellor, has written to provide reassurance that "staff and suppliers will be paid as normal", adding that the sum at risk represented less than 4 per cent of the university's cash holdings.
"There is no threat to the university's operations," she said.
The University of Exeter has £2 million of investment funds deposited with Landsbanki Islands. A spokesman said the investments were made in line with an "investment-limits policy" that ensured that no more than £3 million was held in a single bank, or £5 million in the case of UK clearing banks. "The purpose of the investment-limits policy is to ensure that the failure of any one bank will not cause the university any operational difficulties," the spokesman said.
A spokesman for trade union Unison suggested that universities with deposits in Iceland had been badly advised. One university finance director had told the Unison official that his university had been advised "months ago to steer clear".
Diana Warwick, chief executive of Universities UK, said universities had broad investment portfolios and were experienced in spreading their risk. "UUK is watching the situation and has raised this issue with the Department for Innovation, Universities and Skills," she said.
Meanwhile, a warning was also issued this week that philanthropic donations to UK universities could suffer as a result of the economic crisis. Joanna Motion, vice-president for international operations at the Council for Advancement and Support of Education, said that although it was "too soon" to predict the full effects, the crisis "may slow things".
She said universities should not stop asking for donations, but needed to ensure the messages they were putting out were "thoughtful" and targeted at the right sectors. "Now is not a good moment to be talking to bankers," she said.