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Laiki Bank’s UK depositors spared Cypriot savings levy

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Thousands of UK depositors have escaped the Cypriot savings tax after Laiki Bank UK accounts were transferred to UK branches of the Bank of Cyprus.

Laiki UK branches currently has some 15,000 accounts worth around £270m.

Depositors will not have to pay Cyprus’ bank levy and will not be subjected to limits on cash withdrawals, which are applicable to deposits held in Cyprus.

Bank of Cyprus UK falls under UK regulation, which means savings up to £85,000 are covered by the Financial Services Compensation Scheme.

The bank will also honour any pre-existing terms of transferred deposits.

While the transfer takes place, customers will be able to use branches and services of Laiki UK Bank.

However, according to the Prudential Regulation Authority (PRA), a new subsidiary of the Bank of England set up to help regulate the UK banking sector, a number of customers whose accounts are in overdraft will not be transferred to Bank of Cyprus UK.

“These accounts are now frozen at Laiki Bank UK and customers in overdraft will no longer have banking facilities at Laiki Bank UK. Customers in overdraft will need to contact Laiki Bank UK if they have any questions about what this means for them,” a PRA statement said.

Customers who had an overdraft facility but were in credit are being advised that this facility has been cancelled. They will need to contact Bank of Cyprus UK if they want to apply for a new overdraft facility.

Additionally, mortgages and loans will not be transferred to Bank of Cyprus UK.

These services have been transferred to the Cypriot branches of Bank of Cyprus and customers will be contacted directly in due course. However, customers are being advised that they should continue to make repayments as normal.

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