Bank Of Cyprus Has No Similarities To the Icelandic Banks Fiasco

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The Cypriot-based banking group, Bank of Cyprus has been in the news throughout a number of countries, but not in the derogatory light that was connected to the troubled Icelandic Banks. During the Icelandic meltdown of last year, the British government was out 2.3 billion pounds, as it bailed out savers that had trusted foreign banks in Iceland. These were depositors left unprotected, when the Icelandic banking system failed.

Because foreign banks can offer the highest investment rates to depositors, there were some financial advisors that mentioned a concern over high-paying foreign banks like the Bank of Cyprus, because they offer some of the best investment rates on their one-year bonds. The thing that is mentioned is concern over the amount of compensation you would receive, if a foreign bank collapses, like in the case of the Icelandic system. Whether a banking group subscribes to the FSCS in Europe and whether they had a UK subsidiary determined whether they offer guaranteed deposits.

In the case of Bank of Cyprus UK, depositors are covered by the 100,000 pound deposit protection scheme offered. Just because you might have heard rumblings of financial difficulties in Greece, it helps to realize that Bank of Cyprus is rated Aa3 by Moody's and AA- by Fitch, besides the fact that Britain is rated A A A. It's important to realize that the Cypriot government has increased the compensation limits, so that means depositors have an additional 50,000 pounds of protection.

While it is only natural that many of the depositors in the UK have reason to be concerned about their deposits in foreign banks, these concerns apply to depositors all over the world. Just because many British invested their savings in the Icelandic system doesn't mean that all foreign banks are lacking in protection. The Bank of Cyprus has 567 branches or subsidiaries, located on five continents. Depositors with multi-national banking and financial services groups have less risk involved and more rewards might be offered because foreign systems can be more competitive.

Bank of Cyprus Australia is in the conservative Australian banking sector, which has been dominated by the "big four" domestic banking conglomerates, for many years. There are a few other select international banking entities allowed to join the ranks, including HSBC, Citibank and ING, just to name the most well-known international names. Because of the 90% dominance in mortgage lending by the domestic banks, the Australian government is encouraging particular foreign banks to participate as part of the banking deregulation. It is believed it will encourage competitiveness, which is good for the consumers.

Obviously, the connection to Icelandic banking failure is not something that Australian authorities have connected to certain foreign banks, even though Australia has always had strict banking regulations. For savers that are looking for better returns, "buyer beware" might be the best approach, when it comes to dealing with foreign banking entities, but not all foreign banking entities are created equal. Bank of Cyprus is a large banking group that has established trust among customers on several continents and they have been established since 1899.