The United Kingdom branch of the Laiki Bank has evaded the so-called 'haircut' of depositors in the beleaguered Cypriot bank. This is the decision by the new financial watchdog of the Bank of England.

The Prudential Regulatory Authority said that GBP 270 million or   US$410.5 million worth of deposits currently in Laiki Bank UK have been transferred to the UK arm of the Bank of Cyprus. Under British laws, deposits of up to GBP85,000 were guaranteed to be returned to the depositor.

Laiki had operated an office in the UK which meant that its depositors wherever located would be subject to the levy imposed under the Cypriot bailout program. The transfer that was made though exempted them from the application, as the funds would become part of a fully regulated subsidiary subject to British rules and regulations.

This is a breath of fresh air for many depositors, as Laiki Bank would end up being imposed a levy as high as 60% of deposit amount.