By Jason Douglas and Paul Hannon
LONDON--Britain is seeking to shield depositors in U.K. branches
of Cyprus Popular Bank PCL (CPB.CP) from contributing to the
island's bailout, U.K. Chancellor of the Exchequer George Osborne
said on Tuesday.
Mr. Osborne told a panel of lawmakers tasked with scrutinizing
economic policy in the U.K. that Bank of Cyprus PCL (BOCY.CP) has
an established U.K. subsidiary and its depositors are covered by
the U.K. deposit insurance regime.
But Cyprus Popular Bank only has branches, he said, which means
its depositors are covered by Cyprus's deposit insurance scheme.
Depositors with more than 100,000 euros ($128,530) in Cypriot banks
could face losses of up to 40% as part of a bailout for the
crisis-hit euro-zone nation, Cyprus's Finance Minister Michael
Sarris said earlier Tuesday.
"We are engaged in negotiations to try and avoid the branches of
the Cyprus Popular Bank in the U.K. becoming sucked into the
Cypriot resolution process," Mr. Osborne said.
Mr. Osborne said British ministers made it clear to their
counterparts internationally that they thought an earlier plan to
tax insured deposits in Cypriot banks was a bad idea. Mr. Osborne
said he spoke to International Monetary Fund Managing Director
Christine Lagarde about the proposals, while Prime Minister David
Cameron discussed it with Russian President Vladimir Putin.
Write to Jason Douglas at jason.douglas@dowjones.com