ATMs emptied as servicemen and expats bank accounts raided in Cyprus

Thousands of UK servicemen and women and expats in Cyprus face having their bank accounts raided as part of an EU bailout.

Britons with bank accounts in the country face having their savings snatched following a £10 billion rescue package by the Cypriot government with its eurozone partners and the International Monetary Fund that includes a compulsory one-off levy on deposits.

People with less than 100,000 euros (£87,000) in their accounts will have to pay a one-time tax of 6.75%, those with more money will lose 9.9%. It is the first time ordinary citizens accounts have been raided.

The move sparked panic and violent protests across the island yesterday as crowds tried to withdraw their money at cash machines. But restrictions have been imposed to stop  people emptying their accounts or moving their money out of the country.

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Britons have about £1.7 billion of deposits in Cyprus and could lose up to £170 million.

Kevan Jones, Labour's shadow armed forces minister, called on ministers in the UK to reveal whether they had fought to exempt British forces personnel in Cyprus to be made exempt from the levy.

"There are thousands of UK service personnel and their families based in Cyprus who could be impacted by this. Some may have served in Afghanistan," he said.

"Ministers must tell us how many personnel and their families could have their savings docked and whether they argued for exemptions for our forces. If not, the country will be angry and will want to know why not.

"Service families have been hit by cuts to allowances and permanent reductions in pensions by the government.

"If our forces' savings are raided while they are stationed in Cyprus as part of their military service the whole country will be outraged.

"Our heroes should not lose out while serving their country."

There are 59,000 British residents in Cyprus and 1.1 million Britons visit the island every year, the Foreign Office said. About 3,500 British military personnel are based there.

An anonymous British serviceman contacted Sky News last night to say: "Service personnel have no way of reaching their money and all electronic transfers have been barred by the Cyprus banks.

"Service personnel and their families are furious but can do nothing."

British expat David Symonds told the same channel last night: "The view is that the timing is cynical. It's a long weekend here.

"Electronic banking links have been closed. Monday is a public holiday. Banks don't reopen until Tuesday, when they do there will be queues of people on the pavement waiting to get their money out.

"Tempers could get frayed. Those frayed tempers could well lead to violence."

Lines formed at many ATMs in Cyprus yesterday as people scrambled to pull their money following news of the raid on their savings.

Bank of Cyprus UK assured customers in the UK that their deposits would not be affected by the levy, as it is a UK bank and is protected by UK financial regulation.