In 2012, Bank of Cyprus PCL, the largest Cypriot bank, converted its U.K. branch into a subsidiary under pressure from U.K. authorities.

WSJ: Cyprus Rescue Hurts Bloc's Bank Plan

In the U.K. where regulatory pressure has already led to substantial deleveraging, bank lending has slumped, borrowing costs have risen, the economy has flat-lined and bank shares have crashed.

WSJ: Agenda: Basel III��Don't We Have Enough Problems?

The U.K. government has come under mounting pressure from business associations and some U.K. lawmakers, angry at the increasingly aggressive rhetoric coming out of Washington.

WSJ: BP Weighs Dividend Cut