By Marcus Brooks
No doubt many savers will feel like panicking and running around the house like a chicken without knowing what to do. I guess many depositors will now know what it’s like being a chicken when the gravy machine starts.
Savers in Cyprus have been shocked by the news that the 10billion euro approximately £8.7billion international bailout package for its fragile economy comes with hefty demands, to pay for this, a one-off tax on bank savings will be levied in exchange for bank shares.
Under the bailout’s terms, people in Cyprus with less than 100,000 euro’s approximately £85,000 in their accounts would have to pay 6.75 per cent, and those with amounts over that threshold would pay 9.9 per cent. The Cyprus-based bank with UK branches, Laiki Bank UK, has also confirmed savers in the UK would not be affected.
Bank of Cyprus savers should also be happy in the knowledge that their savings will be protected under the FSCS should the bank collapse.
However this would not have been the case last year, In June last year the Bank of Cyprus UK signed up to the FSCS, which protects up to £85,000 of savings per person and £170,000 for joint accounts.
Customers of Laiki Bank hopefully should be protected in the event their bank collapses , through the Cyprus Deposit Protection Scheme, which protects deposits of up to 100,000 euros.
As reported by the mainstream media Chancellor George Osborn has said that the 3,000 British military personnel and 250 civil service staff stationed in Cyprus would be compensated by the UK Government in the event they are hit by the bank tax.
It should be noted that savers with Laiki Bank – which has three London branches and one in Birmingham – are not afforded the same level of protection as they are not regulated by the FSA, with its UK arm acting as a ‘branch’ rather than as a subsidiary