The Cyprus Courts have issued an interim court order preventing deductions on deposits at Bank of Cyprus without fair compensation.
This decision follows on from announcements last week in which Laiki Bank would be split into two banks, a ‘bad’ bank and a ‘good’ bank, with the ‘good’ bank being rolled into Bank of Cyprus. The ‘bad’ bank will consist of all deposits over €100,000 as well as any non performing loans. This ‘bad’ bank will be restructured and will eventually be wound up. Non-performing loans will have actions taken to collect and the funds will be used for any compensation due to depositors. Plans are in place in order that Bank of Cyprus will become properly capitalized. Sums above €100,000 will have a percentage of their deposits converted into newly issued shares of Bank of Cyprus.
There are some restrictive measures in place, but it is important to note that any funds transferred to Cyprus from abroad are exempt from these measures, so it will be business as normal for any new funds.
Cyprus is known as an International Business Jurisdiction due to its enviable tax and legal advantages. It is important to note that the traditional features that have made Cyprus an attractive and vital part of an international structure remain effectively unchanged, such as its Double Tax Treaties and the full participation exemption on capital gains and dividend income and the absence of withholding tax on dividends, interests and royalties. The Cyprus banking system and the corporate sector are distinctly separate.
However, the recent uncertainty surrounding the banking sector may have an impact on clients perceptions of the Cyprus banking sector. Please note that Chesterfield are in a position to offer quality advise relating to structuring projects and direct investments involving not only Cyprus companies, but also various other popular jurisdictions. Chesterfield are an international firm with offices in various jurisdictions and streamline incorporating companies in a number jurisdictions worldwide and banks worldwide and are able to restructure client affairs appropriately.
If you would like more information regarding an existing company or bank account you have in Cyprus and want factual information without the media hype please follow the link below or call us on our offices Telephone Number: 44 20 7097 1385