Cyprus bailout deal spares savers with small deposits

Savers with less than €100,000 in Cypriot banks will not face being charged a levy.

Agreement has been reached on a €10 billion bailout deal for Cyprus that will not affect savers with less than €100,000 (£85,000) deposited in Cypriot banks.

Following lengthy negotiations, the Cypriot Government agreed to wind down the country’s second-biggest bank, Laiki Bank.

And people with more than €100,000 in savings at the country’s banks face being hit by a high levy. The exact details of this will be decided over the next few weeks.

The original plan included charging a levy of 6.75% on people with less than €100,000 in savings with Cypriot banks and 9.9% from people who had balances over that threshold.

This was rejected by the Cypriot Government.

Savers in Cypriot banks' UK arms

The UK arms of the two major Cypriot banks continue to insist that their customers’ money is safe.

Bank of Cyprus UK says it “is a separately capitalised UK incorporated bank, is subject to UK financial regulation, and eligible depositors are protected by the UK’s Financial Services Compensation Scheme (FSCS)". This protects savings up to £85,000.

Laiki Bank UK, which is not covered by the UK FSCS, says its customers are protected under the Cypriot Deposit Protection Scheme, up to a maximum of €100,000. It continues to insist that its customers here will not be affected by the Cypriot levy.

Going to Cyprus soon?

If you’re travelling to Cyprus, banks on the island remain closed and many businesses are only accepting cash. Bank of Cyprus is only allowing cash machine withdrawals of €120 a day, while Laiki Bank has cut its daily limit to €100.

The Foreign and Commonwealth Office is advising people heading to Cyprus to take sufficient euros to cover their stay, “alongside appropriate security precautions against theft”.

British expats receiving UK pension payments in Cyprus can nominate an alternative bank other than their normal one to receive their pension payments.

The International Pension Centre can be contacted by phone on +44 191 21 87777, textphone on +44 191 21 87280 and email: TVP-IPC-Customer-Care@thepensionservice.gsi.gov.uk 

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