LONDON (Reuters) - All deposits in Britain’s branch of Laiki Bank have been transferred to Bank of Cyprus UK and won’t suffer a “haircut” to help bail out the Cypriot government, the Bank of England said on Tuesday.
The BoE’s Prudential Regulation Authority (PRA)said the money will be covered under Britain’s compensation scheme which protects deposits up to 85,000 pounds.
“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 PRA said in a statement.
A BoE spokeswoman said the switch follows a decree issued by the central bank of Cyprus and that the deposits in Laiki are being transferred in full, meaning there are no deductions.
Under an international bail agreement for Cyprus, Cyprus Popular Bank, parent of Laiki, is being wound down.
Depositors with savings of more than 85,000 pounds or 100,000 euros at Cyprus Popular Bank and Bank of Cyprus in Cyprus itself will lose at least 30 to 40 percent to help pay for the bail out.
Laiki Bank UK is a branch, meaning Britain was not obliged to protect its depositors, unlike with Bank of Cyprus UK, which is a subsidiary and therefore its deposits up to 85,000 pounds are protected.
Laiki UK said some 15,000 accounts with total balances of about 270 million pounds have been transferred.
“In consideration for Bank of Cyprus UK Limited assuming liability for these deposits it has received an equivalent amount in cash from Laiki,” Laiki said in a statement.
“Furthermore to ensure continuity of service during transition, holders of transferred deposits can continue to use the branch services of the Laiki UK branch,” Laiki said.
Reporting by Huw Jones, editing by Sinead Cruise