Banking in Cyprus

Foreigners who open Cyprus structures with Cyprus Banking will see an incredible variety of quality from the national and international banks that have established their offices in Cyprus. More and more multinationals and Family offices are using Cyprus as a base for their operations and Cyprus banks are welcoming to foreign business. Cyprus banks offer multi-currency accounts and many other features. Some banks even take applications without the need for visiting their offices (you can get more info from our experts). Therefore, having a company and bank account in Cyprus should definitely be part of your diversification strategy. 

Banking has seen a fantastic surge in the last few years following the 2013 financial crisis. The government has promoted a series of initiatives and reforms that helped private investment and gave confidence to the markets that Cyprus could have a booming banking sector. The overall economy has a sustained 4 % growth per year, credit rating improves per year, and banks are raising private capital and maintaining strong capital positions.

Likewise, non-performing loans have been cut in half, and fresh foreign investment has improved the banking sector, which has become one of the most dynamic industries in the country. The banking business is booming in Cyprus, that’s why we work with the top experts in the country so you can reap all the possible benefits.

Six years ago, the country and the Bank of Cyprus seemed to be walking to the abyss. The largest bank of the country was struck by the European debt crisis, which led several Cypriot banks to bankruptcy, including the second-largest bank in the country, the Cyprus Popular Bank. The economy was bailed out by the troika (the European Commission, ECB, and IMF) with a loan of 70 % of the GDP of Cyprus, with the condition that the country started an austerity program. The crisis worsened to the point that the Bank of Cyprus seized deposits from its clients to stay afloat and avoid total collapse.

Why did it happen? First, Cypriot banks made the unwise decision to lend money to Greece. When the Greek economy collapsed, Cypriot banks made the even worse decisions to buy Greek government bonds expecting a bailout. After the Greek economy continued in a nosedive, the consequences where foreseeable: The banks collapsed and got to the point that they owed more money than Cyprus GDP.

The country asked for a bailout, but the troika wasn’t so eager to do it. So, what was the solution? To literally take the money from people’s account imposing a 6 to 10 % tax on savings accounts to pay the debt. Fearing that the government was going to grab their money, Cypriots ran to the banks to take their money away from them and the government-imposed restrictions on the amount of cash they could withdraw. Eventually, the plan of imposing a tax over saving accounts was thrown away, and the bailout happened.

Fortunately, the government soon corrected the direction the country was heading and most of the debts of the emergency loans were paid. The government has applied plenty of pro-business reforms that have led to a resurge in the banking sector. Banks have regained investors’ trust, meaning they are starting to diversify their offer.

Banks are introducing new products and services for companies, individuals, start-ups, and ventures with a ton of potential, and are expanding their services to the main economic sectors of the country: shipping, tourism, real estate, and professional services. All the leading Cypriot banks have passed the ECB stress tests and are moving towards sustainable, yet exponential development, thanks to the shedding of NPLs.

The pro-business reforms promoted in the last few years have given banks more ways to reduce the burden of difficult assets and their economic imbalances, as they are sequels left by the crisis. Several laws passed in 2018 strengthened the banking sector flexibility to deal with the legacy of the crisis, allowing them to securitize loans and speeding loan recovery rates, which accelerated the drop in NPLs in Cyprus, which is by far, the fastest in the EU. All this has improved liquidity and solvency in the banking system, which has reduced risk and increased net loan demand, further dynamizing the economic activity in the country.

The banking sector of the country is made up of two kinds: domestic banks and international banks. International banks have been attracted to Cyprus for its friendly fiscal regime and to use the island as a base for other emerging markets. The fact that the BCE regulates the banking sector, and in full accordance with EU directives also helps. There are more than thirty foreign banks in Cyprus. Most of them have limited interaction with the national economy.

Aside from the traditional services of deposit and lending to individuals, corporations, and SMEs, Cypriot banks operate under the universal banking model. That means they provide a wide array of products and services. Still, customer deposits are the primary source of income for banks in the country. The main players in the Cyprus banking world are the Bank of Cyprus, the Hellenic Bank, and the RCB Bank. The rest of the market are smaller banks and foreign subsidiaries such as Greek Eurobank. 

The main domestic and foreign banks are the Bank of Cyprus, Alpha Bank, Co-operative Central Bank, Cyprus Popular Bank, Emporiki Bank (Cyprus Ltd), Hellenic Bank, National Bank of Greece (Cyprus) Ltd, Société Générale (Cyprus Ltd) and Universal Bank. Two other banks operate as branches of foreign banks: Arab Bank plc and National Bank of Greece SA.

The country has three specialized financial institutions: the Cyprus Development Bank, the Housing Finance Corporation, and the Mortgage Bank of Cyprus. All of them provide medium and long-term financing for plenty of clients and sectors. For example, The Development Bank offers investment banking services, including corporate consulting. Housing Finance Corporation provides loan services for low and middle-income families seeking long-term housing financing. The Mortgage Bank of Cyprus offers loans for tourism and manufacturing investments.

Main domestic and foreign banks

Bank of Cyprus 

Alpha Bank 

Emporiki Bank (Cyprus Ltd) 

Hellenic Bank

National Bank of Greece (Cyprus) 

Société Générale (Cyprus Ltd) 

Universal Bank

Astro Bank

Branches of foreign banks

Arab Bank

National Bank of Greece SA.

Specialised Financial Institutions 

Cyprus Development Bank Ltd

Housing Finance Corporation 

Mortgage Bank of Cyprus Ltd.

In the last few years, the banking sector has attracted a significant amount of FDI. Brexit has had a positive impact over Cyprus as some UK-based companies look at Cyprus as an alternative operational location in the EU. What are some banking investment opportunities in Cyprus? There are plenty of them:

  • Distressed assets

  • Loan portfolios

  • Mergers and acquisitions

  • Private equity and venture capital opportunities

  • Financing large infrastructure governments

Who we are

In Mundo, we believe in freedom. That means we aim to protect your investments and your assets. In a time when it seems that governments actively seek to persecute the income of high net worth individuals, it is an obligation to seek ways to legitimately optimize your taxes.

Since 1994 with NTL Trust, we’ve been helping high net worth individuals to optimize their taxes all over the world so they can secure their business and reinvest their money freely.

In all these years, we’ve assembled an unparalleled network of experts to provide the best possible services with top-notch expertise for our clients.

That’s the reason why we work with ne of the top financial services provider in Cyprus, with a multidisciplinary team that covers all aspects of the corporate world. 

Banking in Cyprus offers incredible opportunities, but choosing the best for you may be tough, especially if you want to seek the best tax optimization possible. Cx Financia works with an amazing network of offshroe an onshore banks to aid their clients in opening and closing bank accounts, due diligence issues, setting up and managing their accounts, and more.

Want to know more? Banking section" target="_blank">Contact us and ask for a consultation

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