CYPRUS: ‘Shipping is back on the map’

* BOC launches shipping finance unit *

Despite the troubles at Limassol port, with the slow transition to a private operator and management, the authorities are confident that the shipping sector will continue to grow, prompting the island’s largest lender, Bank of Cyprus, to launch a dedicated shipping finance unit.

 
Already accounting for about 7% of economic output, Transport Minister Marios Demetriades has reiterated the administration intent to boost that to about 8.5% of GDP.
Cyprus has a very strong ship-management sector, offers services to almost 5% of the world’s fleet and has around 22-25% of independent third party ship-management, Demetriades told the “Shipping Forecast Summit 2017” in Limassol organised by the Bank of Cyprus.
“During the past couple of years we have been attracting more companies in Cyprus and actually our effort is to attract shipowners,” the Minister said, adding that the more shipowners you have the more other activities you attract. Moreover, “the Turkish embargo affects the growth of our fleet and this is something everyone recognises,” he said, adding that this is one of the reasons that “if we have a solution to the Cyprus problem and lifting of the embargo, this will help our registry a lot.”
Parliament has before it legislation pending approval that will establish three Under-Secretariats reporting directly to the President. These will be for tourism, development and shipping, with the latter eventually replacing and upgrading the Department of Merchant Shipping (DMS).
The Minister noted that the new shipping strategy, aiming to further enhance and develop the maritime sector, is based on five pillars, the development and implementation of a national shipping promotion strategy, the cooperation enhancement within the Cyprus maritime cluster, the establishment of shipping incentive schemes, the fine tuning of the shop registry pricing policy, and the development of the one-stop shipping shop.
Pointing out that the shipping sector “is a very important sector for our economy,” Demetriades said that “as a government we are truly committed and we have taken a number of measures, which have been successful so far. Actually one of the indications is the number of events we have this year about shipping. This is an indication that Cyprus shipping is back on the map.”
One of the new things the ministry did, he explained, was to hire a private company in London to promote Cyprus shipping. He said that this was important “because we needed the input of the private sector and we can get more input from the private sector in promoting shipping.”
Demetriades expressed satisfaction with the fact that banks get into shipping finance end expressed hope that this will be successful “as this is a risky sector but it can be also beneficial as well.” In addition to Bank of Cyprus, Hellenic Bank also has a shipping unit.
On his part, Bank of Cyprus CEO John Hourican said that “the facts today suggest that this business area has the potential to be a sensible, profitable and indeed long-term business for the Bank of Cyprus. We will of course need to ensure that we hire well, that we engage in great risk management and develop the necessary embedded expertise to build a valuable business for our shareholders but also in partnership with our customers.”
He noted that “Cyprus is a major flag carrier and is the number 1 shipping management centre in the European Union” and that shipping represents about 4% of Cyprus’ GDP and near 8% of the economy.
“It is a very important part of this economy and has real potentials, despite the challenges facing it. Greek and Cypriot ship-owners account for about 17% of the world tonnage and Cyprus is a great place to domicile much of this fleet and build long-term businesses of substance,” Hourican underlined.
He noted that the Bank of Cyprus does wish to serve the national market through careful customer selection, through careful asset selection and through being there over the long-term for this market.
“We aim to become, hopefully by choice, a trusted banking partner for a select and progressive group of ship-owners and services. We will build our capability very carefully and we will endeavour not to disappoint you along the way,” Hourican concluded.