Update Regarding re-capitalization of Cyprus Banks

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.