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Reassurance offered to UK savers over Cyprus

Reassurance offered to UK savers over Cyprus

Category: Savings

Updated: 26/03/2013
First Published: 25/03/2013

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

UK savers with money deposited in Cypriot banks have again been reassured that their money is safe. As part of the last minute deal to secure a bail-out for Cyprus , savers with more than 100,000 euros (£85,000) in its banks are facing a levy of as yet unknown proportions. However, savers from these shores who have accounts with Bank of Cyprus and Laiki Bank have been told by the banks themselves that they will not be affected.

Bank of Cyprus UK says it is not affected by the events since it is a separately incorporated UK bank.Its depositors are protected by the UK's Financial Services Compensation Scheme (FSCS), which covers savings up to £85,000 should anything go wrong at the bank.

The difference with Laiki Bank UK , which has four branches in Britain , is that its UK operations are operated from Cyprus . As a result, the deposits of its 13,000 UK-based savers are not protected by the FSCS, but by its Cypriot equivalent instead. The Cyprus Deposit Protection Scheme, offers protection of up to 100,000 euros, but depends on the Cypriot government for its backing.

The news that Laiki Bank is to be wound down has added a new twist to the whole sorry tale and created more confusion.Under the terms of the bail-out, Laiki (also known as Cyprus Popular Bank) is being broken up. Deposits with Laiki of less than 100,000 euros will be moved into Bank of Cyprus, which itself is being restructured.At the same time, deposits of more than 100,000 euros will be moved into a 'bad bank' and suffer the levy when it is decided in the next few weeks. However, despite the dramatic train of events, Laiki Bank UK insists that its money won't be affected by the levy.

Both banks said UK customers can make withdrawals should they so wish.

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