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Re-structured Cypriot banking sector backed by eurozone

Advantages & opportunities to investing offshore via Cyprus (EU):

• Cyprus: EU, Eurozone & Commonwealth
• Ideal Geographical location for investment services
• Geopolitical stability & business friendly Government
• Macroeconomic resilience & growth
• Well developed infrastructure for investment services
• Restructured Cypriot banking sector
• Most favourable tax planning system in the EU
• Cyprus International Business Company (IBC)

The Cypriot banking sector has recently gone through major changes and restructuring, as guided by the Euro group, as well as Troika lending trio of the European Commission, European Central Bank and the International Monetary Fund. This was essential in order to reduce its size and impact on Cyprus' national economy. In doing so, it has made banking in Cyprus (and the wider EU and Eurozone) more sustainable and boosted its credibility as a support function to internationally regarded professional services.

Cyprus is still very much known internationally as financial and banking hub. Prior to the Global Financial Crisis and economic issues faced in the wider European Union and Eurozone shortly after, Cyprus had a strong banking sector, very robust, liquid and with a strong capital base that is well over the minimum required by the EU. In fact, major Cypriot banks had a capital ratio of 10%-12% compared to the EU average of 8%. The whole banking system also has many more deposits than loans, again well over the EU average.

The Cyprus financial intermediation and professional service sector accounted for almost four-fifths of national GDP, whilst the Cyprus banking sector alone employed almost 13,000 people in Cyprus alone. Although it is still predominant, it has been reduced in order to become more sustainable for the long term, better in line with Eurozone and EU average standards and indeed a lot more credible.

Major changes in Cyprus' banking sector: after major financial restructuring in other Eurozone countries, namely Greece (like in Ireland, Portugal and Spain, and even the UK) where Cypriot based banks had significant vested interest in national bonds that proved unsecure, as well as toxic loans, the Cyprus banking sector was forced to go through some major changes.

Cyprus' banking sector was way too large in comparison to national GDP. Dramatic action was taken by the government and backed by the Euro group in order to reduce its size and in turn impact on the national economy. This included a split of the country's second largest bank Popular Bank of Cyprus (Laiki) with a "good" fraction merging with the largest Bank of Cyprus, tighter lending measures and an initial organised levy (with subsequent return in shares) in order to sustain a bailout loan from Troika lender (European Commission, European Central Bank and the International Monetary Fund).

Essentially, the Cypriot economy was altered to have less dependence on the banking sector, as well as ultimately make the economy more diversified, sustainable, better in line with European structures, and as such, a lot more credible for the long term.

Banks in Cyprus: major banking institutions in the Cypriot banking sector include Bank of Cyprus, Alpha Bank, Hellenic Bank, and USB Bank, as well as subsidiaries of many international banking brands, and branches of both EU and non EU leading groups. Overall, there are 16 local banks and 33 international banks in Cyprus. All banks maintain correspondent networks around the world and subscribe to SWIFT, Reuters, Telerate and other such services.

The Central Bank of Cyprus, an autonomous institution established in 1963, is the supervising authority of the banking system in Cyprus. The Central Bank follows the Basel Committee and European Union banking regulation directives. In January 2008, the Central Bank of Cyprus was integrated into the Eurosystem under the European Central Bank. Also part of the Supervisory/Regulatory Framework, monitoring financial institutions based in Cyprus are Cyprus Securities and Exchange Commission; Co-operative Credit Societies' Supervision and Development Authority; Commissioner of Insurance Companies (Ministry of Finance); Insurance Services Law; and Authority for the Supervision of Pension Funds (Ministry of Labour and Social Insurance).

Among other vital functions, the primary role of the Central Bank of Cyprus is to make sure that the Cypriot financial system is secure and stable, thereby further encouraging economic growth via inward investment and domestic confidence. In doing so, it must maintain efficient Cyprus bank regulations and supervision. The Central Bank of Cyprus is itself guided in its supervisory role by the recommendations of the Basle Committee on banking supervision and the EU Directives on banking regulation.

• Implementing the European Central Bank's monetary policy decisions, and contributing to its definition
• Holding and managing the official Cyprus international reserves
• Supervising Cyprus banks
• Promoting, regulating and overseeing the smooth operation of payment and settlement systems
• Safeguarding the stability of the Cypriot financial system
• Official Cyprus government banking institution

As part of the government's initiative to position the country as a financial gateway and encourage foreign investments, especially in professional services, Cyprus has adopted International Financial Reporting Standards over three decades has passed Anti Money Laundering legislation (Law188(I)/2007), Markets in Financial Instruments Directive (MiFiD), and Transparency Law and Anti Money Laundering Law. Meanwhile, the country has also completely liberalised capital movements, enabling the former IBUs to provide credit and full banking services as branches or subsidiaries of foreign banks.

• Banks Listed in the Cyprus Stock Exchange

  1. Bank of Cyprus Public Co Ltd    2. Marfin Popular Bank Public Co Ltd - (following major re-structuring of the Cyprus banking and financial sector to receive the support of the Euro group and        Troika, this bank has been split in two, with the "good" division remaining in Cyprus and merging with the Bank of Cyprus)    3. Hellenic Bank Public Co Ltd    4. USB Bank PLC

• Subsidiaries of foreign banks in Cyprus

  1. Αlpha Bank Cyprus Ltd    2. BNP Paribas Cyprus Ltd    3. Emporiki Bank – Cyprus Ltd    4. National Bank of Greece (Cyprus) Ltd    5. Russian Commercial Bank (Cyprus) Ltd    6. Societe Generale Bank-Cyprus Ltd    7. Bank of Pireaus (Cyprus) Ltd    8. Eurobank EFG Cyprus Ltd

• Other Banks Cypriot banks

  1. Cooperative Central Bank Ltd    2. Cyprus Development Bank Public Co Ltd    3. Οργανισμός Χρηματοδοτήσεως Στέγης    4. Κτηματική Τράπεζα Κύπρου Λτδ

• Branches of European Union banks

  1. Barclays Bank PLC    2. Banque SBA SA    3. First Investment Bank Ltd    4. Joint Stock Company "Trasta Komercbanka"    5. Εθνική Τράπεζα της Ελλάδος Α.Ε.    6. Central Cooperative Bank PLC    7. Banca Transilvania S.A.    8. Joint Stock Company Akciju Komercbanka "Baltikums"    9. AS LTB Bank

• Branches of banks from non-EU countries

  1. BankΜed SAL    2. Arab Jordan Investment Bank SA    3. BANQUE BEMO SAL    4. Bank of Beirut SAL    5. BBAC SAL    6. BLOM Bank SAL    7. Byblos Bank SAL    8. Credit Libanais SAL    9. FBME Bank Ltd    10. Open joint-stock company AvtoVAZbank    11. OJSC Promsvyazbank    12. Jordan Kuwait Bank PLC    13. Jordan Ahli Bank PLC    14. Lebanon and Gulf Bank SAL    15. Lloyds TSB Investment Ltd    16. Privatbank Commercial Bank    17. IBL Bank SAL