Bank of Cyprus now protected under FSCS

Thousands of savers with accounts from one Cypriot bank’s UK arm can now breathe easier after news has emerged that their deposits will now be protected by the Financial Services Compensation Scheme going forward.

The UK arm of the Bank of Cyprus has the happy task of informing thousands of its cash ISA customers that the almost £1 billion worth of their collective deposits is to be covered by the FSCS from the middle of July. While the bank has bee doing business in the UK for more than half a century, the Compensation Scheme did not provide insurance against catastrophic bank failures throughout that time, as it was instead under the aegis of a comparable eurozone scheme that offered €100,000 in cover – roughly equivalent to £81,000.

However, the eurozone crisis is raising concerns over the financial health of Cyprus. The island nation’s Central Bank recently said that the likelihood of it becoming the next country in line to beg for a bailout from the EU is high, and with the nation’s economy tied so closely to Greece, Cyprus could take a massive blow if Greece exits the eurozone.

One spokesman for Bank of Cyprus spoke out on the issue, stating that the uncertainty in the eurozone – a direct result of the economic turmoil gripping Greece and other countries – has led it to seek protection from the UK compensation scheme as a way to provide more comfort to its savers. Banks from other at-risk countries, such as Spain-based Santander, have also been causes of concern for UK savers, but the FSCS covers UK deposits with Santander up to £85,000 per banking licence as well.

 

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