This article looks at the fallout from Barclays' recently announced policy of shutting accounts in Cyprus and Malta that don't meet minimum size requirements.

Clients of Barclays living in Cyprus who have been told that their accounts will be shut from September unless they contain at least £100,000 (about $155,000) have been contacting Bank of Cyprus UK about its services as an alternative, that firm says. Clients in Malta will also be affected in the same way by Barclays' policy.

Barclays is acting to focus on 70 “core markets” – part of a strategy announced late in 2013 - and reduce costs. The firm has, like many of its peers, shrunk the number of booking centres amid rising regulatory and compliance costs; it is due to report interim 2015 results on 29 July. Earlier this month, Barclays announced that Antony Jenkins was leaving as chief executive, with non-executive directors saying they wanted a faster pace of change at the firm.

Cyprus is one of the 70 countries Barclays is focusing on; along with Malta and Greece, it is understood by this publication to be designated by the bank as a “restricted” country where the bank applies the minimum threshold. The bank has written to customers in Cyprus and Malta but has not yet done so in Greece out of consideration for the current financial crisis in that country, WealthBriefing understands.

Soteris Antoniades, acting CEO of Bank of Cyprus UK, told this publication that it has already been contacted by Barclays’ customers. 

“We have had over 400 enquiries to date, with 25 per cent of these proceeding to apply to open accounts with Bank of Cyprus UK Ltd. We would like to remind British pensioners that their state pension can now be paid directly into a local bank account in Cyprus,” Antoniades said.

“It is not for us to comment on strategic decisions of other banks. As a bank we understand the implications of the increasing demands for reports and information by regulatory authorities. We are however in a position to be able to respond differently and in relation to Cyprus we are in a position to provide assistance to their customers either by way of a UK current and or savings account with BOC UK, or indeed a local bank account in Cyprus,” he said.

Cyprus has been through a financial crisis of its own. A number of banks in the Greek part of that Mediterranean island were hit by forces such as exposure to heavily indebted local property firms, the Greek government debt crisis and a sovereign downgrade of Cyprus to junk status by rating agencies.

Asked about this issue, Antoniades said: “BOC UK is a UK incorporated and regulated bank. With regards to Cyprus, its recent troubles are well documented. However the chairman of the European Commission, Jean-Claude Junckers, on a visit to Cyprus earlier this month (16 July 2015) said that difficult decisions taken by the Cypriot government in 2013 are paying off, like in the cases of Ireland, Portugal and Spain.”

A spokesperson for Barclays told this publication: “As a global financial services provider, we evaluate the services we provide on a regular basis. In 2013 we announced that we are prioritising the need to reduce complexity and that the business will be focusing on a core set of 70 markets globally. As a result of this decision and in line with our strategy, Barclays has introduced a new minimum threshold for its customers resident in Cyprus. We are writing to affected customers and aim to provide as much assistance and support as possible during this transition.”

Expats who are Cyprus residents are entitled to open an account with a local Cypriot bank; UK state pensions can be paid to a local bank in the country where the expat lives.

Bank of Cyprus UK has operated in the UK since 1955 and serves small/owner-managed businesses from its offices in London and Birmingham. BOC UK is a member of the Financial Services Compensation Scheme in the UK, which means all eligible deposits are protected up to £85,000 per customer until and including 31 December 2015. From 1 January 2016 all eligible deposits will be protected up to £75,000 per customer. 

Cyprus ranks at 64 out of 189 on a scale of ease of doing business, where one marks the highest score – held by Singapore – according to the World Bank’s “Doing Business” barometer.