Cyprus banking system – BOC Cyprus banking system – BOC Cyprus banking system is showing signs of recovery. Recently Moody’s has reported an improved outlook status for 3 Cyprus banks – Bank of Cyprus, Hellenic Bank and Russian Commercial Bank and changed its rating from negative to positive. The biggest problem for Cyprus based banks is non-performing loans (NPL) caused by rising unemployment and a shrinking Cyprus economy. A gradual decline in deposits in Cyprus banks is also adding to the frustration. Private sector deposits have fallen to €34.4bn in January 2014 which represents a big drop from €50.6bn in May 2012. Other troubled economies like Greece and Portugal have also reported a drop in private deposits of 0.2% and 1.3% respectfully. But the biggest ‘time bomb’ is NPL. At this moment, NPL has reached 41.7% of total loans or €21.2bn. Overall NPL stay €27.5bn in January 2014. There is a worrying factor for Cyprus property owners who have bought new property from developers and have not received title deeds for their Cyprus property. They are facing uncertainties as banks can repossess property from troubled property developers and will ask property buyers to repay developers’ bad debts to banks. Cyprus property owners who have already paid for their Cyprus property in full might face paying extra to Cyprus banks in order get title deeds and have full rights to their property. Total loans to developers were €7bn with about 66.2% classified as NPL in January 2014. It represents €4.7bn. Regardless to all of the difficulties in the Cyprus banking system, Cyprus banks still give a lot of advantages. We do recommend using Cyprus banks for opening corporate bank accounts but not to hold big deposits. Opening bank accounts in Cyprus still remains simpler than opening a bank account for an offshore company in other jurisdictions such as Hong Kong. Cyprus banks still open bank accounts for tax haven jurisdictions like Belize, Seychelles or BVI. Another big advantage is the fact that there is no need to come to Cyprus in order to open a bank account. Governments around the world are getting tougher on tax evasion and putting a lot of pressure on traditional tax havens making them riskier to use in international tax planning or assets holding. A Cyprus company with a bank account in Cyprus represents a good substitute for traditional tax haven jurisdictions. It is worth noting that incorporation and maintenance fees for Cyprus offshore companies have dropped down substantially in recent years. If someone feels opening a bank account for a Cyprus company is risky, a bank account could be opened in another jurisdiction such as Latvia, Lichtenstein, Switzerland or Singapore. Singapore is the 4th world financial centre. Please read more about advantages of opening bank account in Cyprus and Cyprus offshore companies
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