Greek banks eye prosperous Cyprus market March 29, 2008Posted by grhomeboy in Business & Economy.
Tags: Banking, Business, Cyprus, Economy, Greece, Real Estate
Cyprus’s stable economic environment, accompanied by a strong growth rate of over 3.5 percent, growing mortgage demand and an increase in foreign deposits are the primary elements drawing the attention of Greek bankers who wish to enter the Cyprus market.
An Alpha Bank team is planning to visit Cyprus in the coming days for the opening of its new, privately owned building, and is expected to announce further plans to boost activities on the island. Last week, a National Bank delegation was also in Cyprus for business matters.
Greek banking groups are now renewing their interest in the Cyprus market, attracted by the large foreign deposits coming into the country, as well as by the momentum offered by business initiatives assisted by foreign funds. At present, Russia and Ukraine play a leading role in such business moves, facilitated by an especially favorable tax system. Other highly promising areas are the housing and real estate markets.
Significant aid to foreign companies wishing to operate in Cyprus is offered by a favorable tax system, which translates into corporate taxation of 10 percent, as well as the country’s double taxation avoidance agreements. The country’s admission into the eurozone is another positive aspect that comes into play.
Over the past two years, deposits in foreign exchange by non-EU residents rose as much as 59 percent to 18.5 billion, according to data from the Cyprus Central Bank. Bank officials explain that despite Cyprus’s limited population, interest from banks is high, considering the excellent potential for growth in both corporate and retail banking.
The dominance of local banks is not seen as obstructing the profitable operation of Greek banks. Alpha Bank’s Cyprus operations are its most profitable in SE Europe, allowing the Greek bank to plan an increase in the number of its branches from 35 to 50. In the Cyprus market, Alpha has a 9.6 percent share in loans and 6.6 percent in deposits.
Strong interest in the Cyprus market has also been also shown by Piraeus Bank, following its takeover of Arab Bank, which has been incorporated into the bank’s network and has plans to open another 10 branches. Piraeus group’s business plan forecasts an increase in loans from 30 million to 800 million, as well as a growth in deposits from 20 million to 1.5 billion.
National Bank, which already operates 15 branches in Cyprus, is highly active in business credit, with a 4 percent share of the specific segment. EFG Eurobank does more corporate banking and plans to establish three new business centers within 2008.