Foreign businesses to stay in Cyprus despite bail-in, say auditors

International businesses continue to use Cyprus as their base, despite a €10 billion bailout agreement that featured a haircut on uninsured deposits in a bid to recapitalise the island’s largest banks, auditors said on Wednesday.

A delegation of the Institute of Certified Public Accountants of Cyprus (ICPAC) met with technocrats of the Troika of international lenders which arrived on Tuesday for the second review of the adjustment programme.

“Seven months after the Eurogroup decisions, most international companies have not fled Cyprus, the impression that a lot of bad things would descend upon us has not materialised,” Nicos Chimarides ICPAC Vice Chairman has said.

He added that the picture is not yet clear and that they would wait for another six months to get more clarity.

Chimarides said that capital controls imposed since the March Eurogroup decisions should be gradually lifted and the Cyprus banking system should be consolidated, so that Cyprus can restore its image as an international financial centre.

Cyprus came last March near a financial meltdown when its two largest banks requested state aid to cover mammoth losses due to soaring bad loans related with the housing sector and the write down of their Greek bond holdings as a result of the Greek sovereign debt haircut. Excluded from international markets the Cypriot government applied for financial assistance. The government agreed with the Troika (European Commission, European Central Bank and the IMF) on a €10 billion rescue, which featured a 47.5% bail-in by uninsured deposits in Bank of Cyprus, the island’s largest lender to replenish the bank’s capital shortfall. Cyprus Popular Bank would be wound down with its good part absorbed by BOC.