Customers of the British unit of failed bank Laiki will be protected from the levy that was part of the eurozone nation’s bailout deal, the Bank of England announced on Tuesday.
The announcement, made by the BoE’s new finance watchdog the Prudential Regulation Authority, means that Laiki Bank UK customers will avoid any Cypriot levy on their accounts and will be able to access their accounts as normal.
The BoE said in a statement that about £270 million ($410 million, 320 million euros) in deposits from Laiki Bank UK would be transferred to Bank of Cyprus UK, and placed in the British government’s compensation scheme that guarantees up to £85,000 per saver.
Crisis-hit Cyprus was rescued with a 10-billion-euro ($13-billion) EU-IMF bailout last week.
As part of the rescue deal, Laiki or “Popular Bank” will shut and merge with Bank of Cyprus. Depositors in Cyprus with more than 100,000 euros in the two banks — the island’s biggest — face losing a large chunk of their money.
“Cyprus Popular Bank Public Co Ltd operating in the UK under the trading name ‘Laiki Bank UK’ has today reached an agreement with Bank of Cyprus UK Ltd to transfer all deposits to Bank of Cyprus UK, a UK subsidiary fully regulated by the Prudential Regulation Authority (PRA) and Financial Conduct Authority,” the BoE said in a statement.
“The agreement does not affect access to bank accounts and therefore all customers who had an account with Laiki Bank UK will be able to access funds as normal and do not need to do anything.”
The Cyprus crisis saw capital controls imposed for the first time by a eurozone economy to prevent financial meltdown.
Under the bailout deal agreed in Brussels last week, Cyprus must raise 5.8 billion euros to qualify for the full 10-billion-euro loan from the “troika” of the European Union, European Central Bank and International Monetary Fund.
Laiki Bank UK branch avoids Cypriot fallout
