Bank of Cyprus seeks UK safety net for savers
Some 50,000 UK savers with the Bank of Cyprus may soon have their savings protected by the UK authorities.
The bank has moved closer to creating a subsidiary for its UK banking business that would be regulated by the Financial Services Authority (FSA).
In doing so, UK customers' savings of up to £85,000 per person would be protected by the UK's deposit protection scheme.
At present they are covered for up to 100,000 euros each by a Cypriot scheme.
This relies on the government in Cyprus covering the cost were the bank - part of the largest financial services provider in Cyprus - to go bust.
The bank said its UK arm, which has four branches and offices, was profitable and well-funded.
Cyprus appears to be edging closer to requesting a financial bailout for itself as its banking system is intertwined with Greece.
The governor of Cyprus' central bank said earlier this week that the country would seek European Union aid if necessary.Displays
The Bank of Cyprus UK, which has been operating in the UK since 1955, said that the transfer had been agreed in principle by the FSA, and it hoped the process would be completed by mid-July.
It is writing to customers to explain the proposed change.
Protection for the funds of savers in UK-regulated banks is run by the Financial Services Compensation Scheme, which guarantees the first £85,000 of savers' deposits were a bank, building society, or credit union to go bust.
It has paid out £26bn in compensation since 2001, to more than 4.5 million people.
The scheme is funded by the financial services industry through an annual levy.
From the end of August, branches of financial institutions in the UK will have to display posters and stickers about which protection scheme applies to them.