Rescue for Cyprus savers in UK?

The Chancellor, George Osborne, has said that the Treasury is working on a "British solution" to the threat to 13,000 UK customers of Cyprus Popular Bank, part of Cyprus's Laiki Bank.

The customers are relying on a guarantee for around £85,000 for each account-holder's savings provided by the government of Cyprus, but they face the possibility of losing some or all of any money above that.

The Chancellor said he wanted to avoid them being "sucked in" by the resolution process to Cyprus's financial crisis and bailout.

So far the Treasury is refusing to elaborate on the Chancellor's comments, but a couple of possible options spring to mind.

One is a straightforward rescue of Laiki savers, along the lines of Icesave and London Scottish Bank in 2008. The branches would close and they'd get all their money, guaranteed by the Treasury.

The other is the forced merger of Laiki branches in the UK with branches of another bank. The most obvious is Bank of Cyprus, which is regulated in the UK and covered by the UK's Financial Services Compensation Scheme.

Such a combination might need financial help from the government, but it could be more cost-effective and convenient.

And it could be the subject of the ongoing discussions the Treasury is having with the Cyprus authorities.