Overseas arms of Cyprus banks say savers can withdraw

The British arm of one of Cyprus's main banks said customers could continue to withdraw their cash but warned that deposits above 100,000 euros ($130,000) may not be safe.

Laiki Bank UK, owned by Popular Bank of Cyprus - also known as Laiki - operates as a branch of its parent and gave clearer guidance on its website on Monday telling customers they are protected up to 100,000 euros by the Cyprus Deposit Protection Scheme and not the UK's compensation scheme.

"This means that if our bank is unable to meet its financial obligations, your eligible deposits are protected up to a total of 100,000 euros per depositor," the notice said.

Britain's Financial Services Authority did not return calls for comment on whether it had forced the clearer guidance.

Ruth Harvey, a member of Laiki Bank UK's management team, said the bank was open as normal and there were no limits on withdrawals and no change to conditions. "We are waiting to hear the details out of Cyprus," she said when asked how savers with more than 100,000 euros might be affected.

Cyprus clinched a deal on Monday that will see Laiki shut down and heavy losses inflicted on uninsured depositors, aimed at averting a collapse of the banking system. Deposits above 100,000 euros will be frozen at Laiki and its bigger rival Bank of Cyprus.

Bank of Cyprus UK operates as a subsidiary, so has its own capital and is covered by the UK's deposit guarantee of up to 85,000 pounds ($129,500).

Bank of Cyprus also owns 80 percent of Russia's Uniastrum Bank, which said it had not put any restrictions on withdrawals in Russia. It said no taxes or measures to bail out the Bank of Cyprus will be applied to Uniastrum.

"Even if after the events in Cyprus our partner, the Bank of Cyprus, will be forced to sell its stake in the Russian bank, this will not affect the financial condition and strategy of Uniastrum Bank," its president Gagik Zakarian said in a statement.

Cyprus has close links with Russia, and Laiki also has significant operations in eastern Europe, including about 140 branches across Ukraine, Russia, Serbia and Romania.

Its 2011 annual report showed it had 1.7 billion euros of customer deposits outside Cyprus and Greece, or 8 percent of the bank's deposits at the time. ($1 = 0.7694 euros) ($1 = 0.6562 British pounds)

(Reporting by Steve Slater; Additional reporting by Katya Golubkova; Editing by Louise Heavens)