GOLD MAGAZINE FEBRUARY ISSUE 2015

INTERVIEWSAlex Hooft van Huysduynen Martin LindstromBarbara Tuge-Erecinska

FIDUCIARY SERVICESChanging with the times

PLUS: MONEY / BUSINESSECONOMYTAX & LEGALLIFESTYLE / OPINION

MONEYA crisismade inSwitzerland

the international investment, finance & professional services magazine of cyprus529

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ISSUE 47 FEBRUARY 14 - MARCH 13, 2015PRICE €4.95

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BANKINGChallenges and Opportunities

4 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

14 | IN BUSINESS AWARDS 2015Photos of the event, plus details of who won what.

42 | THE ETERNAL OPTIMISTInterview with Barbara Tuge-Erecinska, Ambassador of Poland.

80 | SUCCESS... AND SUCCESSIONWe talk to the outgoing and incoming presidents of EuropeFides, the European Accounting, Audit, Tax and Legal Asso-

6 818

Issue 47February 14 - March 13, 2015

EDITORIALUP FRONTFIVE MINUTES WITH...

TIME TO GET SERIOUSBy Kyriakos Iordanou 10

GREATER RESTRUCTURING REQUIREDBy Dr. George Mountis 37

INHUMAN AND ABSURD By George Mouskides 85

+ OPINION

94 {money}

96 {business}

98 {economy}

100 {tax & legal}

102 {lifestyle}

FEATURES

14

42

45

SPECIAL ADVERTISING SUPPLEMENT

THE CYPRUS SHIPPING DIRECTORY17 shipping-related companies

present their service

We profile seven major banks and talk to their CEOs about the new challenges – and opportunities – they face in 2015.

86ciation for medium-sized companies.

86 | A FAMILY AFFAIRLawyer Christos Neophy-tou on the profession and working in a family firm.

88 | A CRISIS MADE IN SWITZERLANDThe Swiss National Bank’s surprise move last month to drop its euro peg sent shocks through the currency markets that led some Forex firms to close down. What happened?

EDITORIAL

John Vickers,Chief Editor

[email protected]

Breaking the Bank?

Cyprus is certainly not the only place in which bankers have seen their public im-age change so dramatically in such a short space of time – from respected mem-bers of the community and people to be respected to deceivers, fraudsters and, at worst, common criminals – but some of the stories that have come to light here since March 2013 have understandably ruined both personal and corporate

reputations. The major banks’ over-exposure to Greek debt (either through loans given or in-vestment in Greek government bonds) and the subsequent haircut which saw them lose some €4.5 billion overnight (numbers may not mean a lot but that figure represents around 25% of Cyprus’ GDP that year) led to accusations of totally inadequate regulation and corporate gov-ernance in a sector that ordinary people had always taken for granted as being safe and secure.

In this sense, it is hardly surprising that confidence in local banking institutions was at an all-time low just over two years ago. But it has to be acknowledged that, following the shock, the island’s banks have been working hard to put their house (and their balance sheets) in or-der. Three of the four that underwent the ECB’s stress tests passed with flying colours and the fourth quickly made up the noted shortfall with a new injection of capital from shareholders. Foreign investors have come into the big banks, Boards have been reshuffled and new CEOs elected and there is an almost tangible sense of optimism returning to the sector, though this may not yet have filtered through to the people who saw their uninsured deposits in Bank of Cyprus and Cyprus Popular Bank (Laiki) taken as part of the unprecedented bail-in and con-verted into shares. It would appear, nonetheless, that 23 months has been long enough to make a start towards regaining customer and corporate confidence.

Unfortunately for the banks, they also have to deal with the increasingly populist-minded opposition parties in the House of Representatives which appear determined to prevent them from being able to resolve their main problem of non-performing loans (NPLs). Under the guise of protecting ‘ordinary people’ who cannot service their mortgages, by refusing to pass es-sential legislation on foreclosures, they have not only ensured that the state does not receive the next tranche of financial assistance under the terms of Cyprus’ Memorandum of Understand-ing with the Troika, but they have also brought about a situation by which the country will not be able to benefit to the tune of €120 million every month until September 2016. Who are the real criminals here?

There are, at present, 56 authorised credit institutions in Cyprus. For this month’s cover story (page 19), we present some essential facts and figures concerning seven main banks and speak to their CEOs about how they are facing the ongoing challenges, including ways of resolving the NPL situation and returning to their traditional business of granting loans to busi-nesses and individuals.

Last month, our cover story featured interviews with eight foreign ambassadors to Cyprus and we continue with two more: German Ambassador Nikolai von Schoepff (page 18) and, in greater detail, Polish Ambassador Barbara Tuge-Erecinska (page 46) who recalls her involve-ment in the now legendary Solidarity trade union and her subsequent diplomatic and political career. Other interviewees this month include brand expert Martin Lindstrom (page 88), Alex Hooft van Huysduynen, Managing Director of TMF Group Cyprus (page 38), George Sav-vides, Partner in Fiducenter Cyprus (page 42), and lawyer Christos Neophytou (page 92), as well as Simon Marsh, Partner, WSM Advisors Ltd, UK, and Stephen Balzan, Partner, ACT Advisory Services Ltd, Malta (page 86) who are, respectively, the outgoing and incoming Presi-dents of the EuropeFides network of tax consultants, certified accountants and lawyers. Add to all this our features on money, economics, business and tax issues, plus an article on investing in cigars, and I think you’ll agree that there’s plenty of good reading in this issue of Gold.


MANAGING DIRECTOR George Michail

GENERAL MANAGER Daphne Roditou Tang

MEDIA MANAGERElena Leontiou

EDITOR-IN-CHIEF John Vickers

JOURNALISTSEffy Pafitis, Chloe Panayides

CONTRIBUTORS TO THIS ISSUE Kyriakos Iordanou,

Andreas Kontos, George Mountis, George Mouskides, Elia Nicolaou

ART DIRECTION Anna Theodosiou

SENIOR DESIGNERAlexia Petrou

PHOTOGRAPHY Jo Michaelides

MARKETING EXECUTIVE Kevi Chishios

SALES & BUSINESS DEVELOPMENT EXECUTIVE

Phivos KarayiannisADVERTISING EXECUTIVES

Irene Georgiou, Christopher ConstantinouOPERATIONS MANAGER

Voulla NicolaouSUBSCRIPTIONSMyria Neophytou

PRINTERS Cassoulides Masterprinters

CONTACT5 Aigaleo St., Strovolos 2057, Nicosia, Cyprus

Mailing address: P.O.Box 21185, 1503, Nicosia, Cyprus

Tel: +357 22505555, Fax: +357 22679820e-mail: [email protected]

subscriptions: [email protected]

ISSN 1986 - 3543PUBLISHED BY IMH

INTERVIEWSMichael DobbsTim PotierColin Wright

INVESTMENTRecord-breaking sales for alternative assets

PLUS: MONEY / BUSINESSECONOMYTAX & LEGALLIFESTYLE / OPINION

BANKINGBank of CypruslaunchesPremier Club

+ DAI LINGYUN, SAVVAS SAVOURI, GEORGE & ALEXIS TSIELEPIS

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C ypriot investment

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National Bank’s

-

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National Bank’s an-

tourist accommodation establishments. According to figures released by Eurostat, the official statistical office of the EU, Cyprus was second only to Malta, with a 96% share of foreign demand.

The publication of these figures follows the announcement that the number of nights spent in tourist accommodation establishments in the EU is expected to have reached an all-time high of around 2.7 billion nights in 2014, up by 1.7% compared with 2013. Following the decline observed in 2009 with the beginning of the financial crisis, there has been a steady increase in the number of nights spent in tourist

accommodation establishments in the EU over the last 5 years, Eurostat details.

This pattern can be observed for nights spent by both residents and non-residents; in 2014, France and Spain continued to be the top 2 Member States in terms of tour-ism nights, with 403 million nights and 401 million respectively, followed by Italy and Germany, 370 million and 366 million.

After Malta and Cyprus, the highest shares of nights spent by non-residents were registered in 2014 in Croatia (92%), Luxembourg (88%) and Greece (79%), and the lowest in Romania (18%), Poland (19%) and Germany (20%).

UP FRONT

EGYPTIAN INVESTOR JOINS AYIA NAPA MARINA

PROJECT A

new strategic shareholder has joined the ambitious €220 million project to build a marina at Ayia Napa. The consortium responsible for the development of the marina

has concluded an agreement with Egyptian investor Naguib Sawiris. Work is expected to start this year and be completed by 2018. Sawiris says that “Even Mykonos does not have marina facilities of the high quality we are seeking to create here. The faster it kicks into the economy, the more success it will have.” Sawiris cited

the marina. He said that it will include a variety of residential and hospitality facilities, including apartments and villas as well as a luxury hotel.

Cyprus recorded the second highest tourist demand from non-residents of the 28 Eu-ropean Union member states

in 2014, accounting for 94% of total demand. Tourist demand is evaluated by the number of nights spent in local


ELEFTHERIA SQUARE RENOVATION RESTARTS

R enovation of Nicosia’s Eleftheria Square has finally begun once again, following the award of the project’s development

contract – valued at €13.5 million – to the prominent local construction firm Lois Builders Ltd. Work is expected to be completed in 64 weeks. The masterplan for the renovation of Eleftheria Square was created by the renowned Iraqi-British architect Zaha Hadid, whose evaluation of the project states: “Eleftheria Square constitutes a dramatic and historically significant architectural intervention – an aspiration to reconnect the ancient city’s massive fortified Venetian walls and moat with the modern city beyond – a bold vision of coherence and continuity which can become a catalyst to unify the last divided capital of Europe.” Discussions about the square’s renovation began decades ago, with Nicosia Municipality issuing tenders in 2004 with the hope of completing the project in time for Cyprus’ rotating presidency of the Council of the EU, in July 2012. A year later work stopped due to a dispute over rising costs. Lois Builders Ltd, founded in 1977, is one of the longest-established and most highly regarded construction companies in Cyprus.

CIFS LOSE €40M ON SWISS FRANC DEVELOPMENTS

CYPRUS RECORDS SECOND HIGHEST TOURIST DEMAND IN EU

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THE MARSHALL ISLANDS REGISTRY

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TOPS GLOBAL

New flights from Larnaca to Lon-don, Amsterdam and Tel Aviv were announced this month. British Airways (BA) will be increasing in the number of

flights from 7 to 13 per week as part of its ‘Summer 2015’ flight schedule. The additional flights start on 29 March and will continue until 25 October, They will use Heathrow Airport’s Terminal 5. As

part of its new pricing structure, BA will be offering attractive rates on its econ-omy fares, with a return ticket priced at €249, inclusive of taxes. This summer, BA will also be running its regular London Gatwick-Paphos and London Gatwick-Larnaca flight schedule.

Meanwhile, the low-cost European airline Transavia starts four direct flights between Larnaca, Paphos and Amster-dam per week. From April 2015, the new route will be serviced by two flights from Larnaca and two from Paphos, with fares starting from €79 one-way. Transavia

also offers flights from Larnaca to Paris (Orly Airport) during the summer season.

Finally, Aegean Airlines began direct flights three times a week between Larnaca and Tel Aviv on 3 February 2015. In the summer, the company will operate daily direct flights between the two cities.

Aegean’s summer timetable, pre-sented on January 13 in Nicosia, will see the operation of 4 Airbus A320 aircraft from its Larnaca base, while the number of destinations connected directly with Cyprus will increase to 14.

MORE FLIGHTS FROM

LARNACA

UP FRONT


T here are hundreds of thousands of singers and musicians in the world, many of whom make records. Of these, only a relative handful make

a great deal of money from their recordings – there is more for those who write their own material – and of these, some are extremely wealthy. Here is the Top 10 richest recording artists, as compiled by Wealth-X, the world’s leading ultra high net worth (UHNW) intel-ligence and prospecting firm.

1. MADONNA Age: 56

Estimated Wealth: $800 million

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Rebel Heart

2. PAUL McCARTNEYAge: 72Estimated Wealth: $660 million

-

Hope For The FutureDestiny

3. DR. DREAge: 49


.

Eminem

six -

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4. DIDDYAge: 45


-

5. CELINE DIONAge: 46


-

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My Heart Will Go On Titanic.

6. BONOAge: 54Estimated Wealth: $590 million

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7. MARIAH CAREYAge: 44Estimated Wealth: $520 million

-

-Glitter

Precious

8. JAY-Z Age: 45Estimated Wealth: $510 million

-

9. ELTON JOHNAge: 67Estimated Wealth: $450 million

-

-

last year.

10. BEYONCEAge: 33Estimated Wealth: $440 million

Destiny’s Dangerously in

Love -

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TOP 10

1

2

3

4

5

7

6

9

10

8

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OPINION

New strategic thinking, a clear vision and objectives are a must

Time to Get SeriousEveryone – politicians included – needs to rise to the occasion

info: Kyriakos Iordanou is General Manager of the Institute of Certified Public Accountants of Cyprus (ICPAC).

I t is now nearly two years since the Eu-rogroup took its difficult yet profound decisions affecting defenceless Cyprus. Although March 2013 is not long ago enough to be in the history books, it feels like ages since we experienced the unprec-

edented application of a bail-in on the shareholders and depositors of the island’s two biggest banks. The Memorandum of Understanding (MoU) signed with the Troika and the inevitable repercussions of the above decision caused a tsunami of further shocks across the whole socio-economic environment of the country.

Over the past 23 months, the Government has received six successful programme assessments, whilst a seventh one is pending. Controversy surrounds the delayed foreclosures and insolvency legislation, an issue which I truly hope will be resolved soon. Along-side the government’s commitment to the MoU, other bodies and organisations are also involved in the programme. What we have recently observed, though, is the fact that ultimatums and deadly dilem-mas arise whenever the next tranche is due for pay-ment to Cyprus, something which I believe is neither helpful nor wise, to say the least.

People and businesses were severely affected by the “electric shock” of March 2013 and are still striving to stand on their feet again. A huge number of measures, actions and laws were decided upon in a very short period of time, which the business community and ordinary citizens were expected to accept and digest fast.

Although no one denies that a great deal needed to be rectified and improved, such fast-track methods do not always guarantee a successful outcome. Major changes have already been made and steps towards compliance with the MoU are being taken continu-ously, as everybody has been more or less dancing to the Troika’s tune for some time now.

The Troika’s shock doctrine may have been effec-tive in the first months but it is my belief that there is no benefit in pursuing it today. Tomorrow will never be the same as yesterday, hence a “consolida-tion” period should be allowed, in order for people and businesses to comprehend, digest and accept all the changes imposed so far and to plan their future actions based on the new realities. They need time to adjust to the new era and rationalise. The Govern-ment should therefore liaise with the Troika to allow

for some breathing space, thus avoiding economic suffocation.

The MoU provides an opportunity for bold deci-sions that will “disinfect” the political and business environment from the malpractices and bad proce-dures of the past. It could be a brilliant opportunity to encourage everyone to think wisely, to think well and to think ahead.

This is precisely what the Government and the House of Representatives must do, if Cyprus wishes to improve and become prosperous again. There is no room for political agendas, nor should political and/or personal financial benefits be sought. This is a tough and challenging period that calls for brave, serious and wise decisions and actions. The political charades witnessed recently (and whenever a crucial issue arises) can only harm the country. Politicians must rise to the occasion, honour the office to which the people of this country have elected them and be brave enough to do the right thing. This is a time for unity and collective action, not for exploiting personal or party ambitions.

People and businesses have already paid a heavy cost for this crisis. The real economy and households are struggling to make ends meet. Unemployment has surged, economic activity has stalled, unserviced bank loans have increased. No-one says that recovery will be easy and there is still a long way to go until it is eventu-ally reached, despite optimistic statements about an early exit from the MoU.

Although the statistics may point to such an exit, liquidity is evaporating from the market, working capital for firms has drained away and, without fresh money, the economy cannot be resurrected. It is thus imperative for new investments to flow into the country to generate economic activity. Cyprus’ reputation and investor confidence and trust must be reinstated, together with an effective, efficient and cost-manageable government mechanism in place, in order to retain our status as an international business services destination. Any unwise political actions or omissions may put this goal in jeopardy.

Undoubtedly, we have reached a point where new strategic thinking, a clear vision and objectives are a must. Taxpayers and businesses must be treated with honesty, integrity and transparency. There must be no more skeletons in the closet and no more last-minute surprises. We must all think ahead and act to the best of our ability. If we are to avoid mistakes we have to do some serious forward thinking and act on it.

By Kyriakos Iordanou


IN BUSINESS AWARDS 2014

George Flouros, Vice President, Financial Divi-sion, NCR Middle East Africa Region, received the Manager Award from Loucas Marangos, CEO, TFI Markets (l) and Angelos Gregoriades, President, Cyprus Investment Funds Association

Pagona Ligou, Human Resources & Commu-nication Manager, Vas-siliko Cement Cyprus, with the Manufacturing/Processing Award

-shore, received the Services Award from Angelos Loizou, Cyprus Tourism Organisation & Demetra Kalogirou, CySEC

Kypros Tsentas, Executive Chairman. Wade Adams Middle East, received the Foreign-based Cypriot Entrepre-neur Award from Yiorgos Lakkotrypis, Minister of Energy, Commerce, In-dustry & Tourism

Iakovos Photiades, Managing Director,

with the Business Award

Panicos Vassiliou, General Manager, Costas Papaellinas Organiza-tion, received the Workplace Award from Irene Georgiades, Chair, Hellenic Bank Group and Philippos Patsalis, Minister of Health

Nicos Shacolas, Executive Chairman, CTC, received the Corporate Social responsibility Award from Marios Deme-triades, Minister of Communications & Works and Yiangos Hadjiyiannis, CIM

Thomas Kazakos, Director-General, Cyprus

Shipping Chamber, received

the Editor’s Choice

Award on behalf of the

Chamber

Emily Yiolitis, Partner, Harneys Aristodemou Loizides Yiolitis LLC, received the Young Business Leader Award in memory of Andy Hadjicostis

Michalis Economou, Co-Founder, AtYourService, received the New Product/Service Award

Gerasimos Caramondanis, CEO, Caramondani Bros Plc received the Lifetime Achievement Award from Harris Georgiades, Minister of Finance

Heracles Heracleous, General Manager, Hercules Sports, received the SME Award from Alexandra Attalides, Acting Head, European

Chryanthos Tsouroullis, presenter

The 2014 IN Business Awards were presented during an im-pressive evening at the Hilton Park Hotel in Nicosia on 22 January. Some 500 invited

local business scene and the world of poli-tics, attended the prestigious event which is now in its 7th year. In total, 12 awards were presented, eight of which were chosen by public vote while three honorary awards were made by the judging panel and one by IN Business magazine. The event was sponsored by Hellenic Bank,

THE AWARDSAwards were presented in the following eight categories (voted for the public (50%)

and the panel of judges) Business S.M.E. Manager Corporate Social Responsibility New Product/Service Manufacturing/Processing Services Best Workplace

Honorary Awards (voted for the panel of judges) Foreign-based Cypriot Entrepreneur

Young Business Leader in memory of Andy Hadjicostis

Honorary Award (voted for IN Business magazine) Editor’s Choice

RECOGNISING BUSINESS excellence

Andreas Neocleous, Irene Demetriou & Mariorita Neocleous, Andreas Neocleous & Co LLC

Harris Georgiades, Minister of Finance & Yiannis Misirlis, Imperio Enterprises

Iakovos Photiades, Iakovos Photiades

Nicosia Chamber of Commerce & Industry

Tony Ellinas & Bojan Mijuskovic, InfoScreen

Jo & George Michaelides, Spima

Socrates Heracleous, Nico-sia Chamber of Commerce & Industry & Theodoros Kringos, Infocredit Group

Haris Hambakis, Eu-robank EFG Cyprus

& Irene Charitou, Alpha Bank

Yiannos Christoforou & Petros Georgiou, Pyxida Fish Tavern

Michalis Papadopoulos, Cyta

Marianna & George Zervides

Irena Georgiades, Hellenic Bank

Bert Pijls, Hellenic Bank

Georgia Lefkariti, Petrolina (Holdings) Public

Greek singer-songwriter Stephanos

Korkolis, provided

the musical entertainment

Constantinos Kapodistrias & Marios Kapodistrias,Chr. Kapodistrias & Sons

Kypros & Elena Tsentas

Socrates Alekou & Rea Kartelia, Unilever Tseriotis

Christos Michaelides, Cyprus Employers Association

Yiangos Hadjiyiannis & Theofanis

Hadjiyiannis, CIM

Zenon Markides, Christodoulides Bros

Nicos Papakyriacou, Deloitte

Maria Theodorou, TFI Markets

Christos Savvides & Melina Tsigaridou, Ledra AdvertisingAntonis Antoniou, Gio-

vanni Developers and Marilena Ierodiakonou, DIAS Publishing House

Akis Agapiou & Demosthenes Mavrellis, Chrysses Demetriades & Co. LLC

Poly Hadjigeorghiou, Swipe Ltd

Sotiroulla Soteriou, Charalambides Christis

Vasilis Petrides, Laiko Cosmos Trading

Kyproulla Papachristodoulou,EY

Nicos Tornaritis MP

Dieter Rohdenburg, Intership Navigation

Avraamides, EY & Christis Christoforou, Deloitte

Nicolas Tzirkas, Island Oil Holdings, Andreas Stavrou, Hellenic Bank, Loukas Marangos, TFI Markets

Christos Michael,

First Names Cyprus

Marios Lanitis, Lanitis Group

Elena Leontiou, IMH, Valentinos Polykarpou, Wargaming, Maria Pilides, IMH

IMH team

Phidias Pilides, CCCI, Yiorgos Lakkotrypis, Minister of Energy, Commerce, Industry & Tourism,

& George Michail, IMH

Andreas Athinodorou & Marina Zevedeou, Aspen Trust Group

Marlen Michael, MTN

Philippos Patsalis, Minister of Health

Demetra Kalogirou, CySEC

Irene Kalogirou, DeLeMa & Panicos Alkiviades, Photos Photiades Group


INTERVIEW

unfold. The conditions here in Cyprus are favourable: a sound and proven Euro-pean legal framework, security of invest-ments, a good level of education and the widespread ability to speak English and even German by a number of people. On the other hand, you have traditional trade links to countries in the region with a high potential.

What impact on the economy do you think a settlement of the “Cyprus Problem” could have?It has been stated many times that the whole of Cyprus will benefit economi-cally from a settlement. Economic theory suggests that a larger market will be more attractive for investments. Much greater gains, however, will derive from the polit-ical stabilization that a settlement brings about. Only when the “Cyprus Problem” is solved, will Cyprus be able to develop its full potential as a reliable business hub for the entire region.

Do you believe that 2015 could be the year in which reunification is finally agreed?Reunification in 2015 is possible. I wish the two Leaders wisdom and courage in their work for this noble goal.

How would you describe your personal experience of Cyprus so far?Cyprus is an interesting but challeng-ing place. I would like to see Cyprus in future as a strong business hub between Europe and the Near and Middle East. The German Embassy is working to sup-port this vision.

What is your opinion of the progress of the Cyprus econo-my over the past 18 months?

The progress that Cyprus has made under the adjustment programme is im-pressive. Compared to the situation 18 months ago, public finances as well as the economic outlook are much brighter. Strict compliance with the programme is beginning to pay off. I am confident that Cyprus will manage future challenges in the best possible way.

What positive developments do you expect to see in 2015? Are there any threats and dangers that need to be identified and dealt with?In 2015, the economy is expected to show growth again after a period of re-cession. It is important now to use the achievements for the next step and to attract sustainable investment into the country.

What is the current state of the eco-nomic relationship between Cyprus and your country? The relationship between Germany and Cyprus is traditionally very good and I think we can further improve it.We do closely cooperate in a number of areas like shipping, trade and tourism.

Do you think that it can be developed further in the immediate future?There is always scope for improvement. I know from frequent contacts with the business community in Cyprus that close

cooperation with German companies is very much sought after. We are ready for that and we have a number of proposals for concrete steps. For example, in the coming weeks I will visit a number of German Chambers of Commerce in or-der to promote bilateral relations.

What is the situation vis-à-vis a Dou-ble Tax Treaty between Cyprus and your country?The DTT has been in force since 1974 and is constantly updated. It operates very well to our mutual satisfaction.

The Government has said that foreign investment is key to reviving the Cy-prus economy. Are there specific sec-tors in which you believe that investors from your country may be interested in?The large German economy is very diver-sified. Therefore, a number of areas can be promising for cooperation. I am fre-quently asked, for example, why renew-able energy is not much more widespread in Cyprus – given the very favourable climatic conditions. And traditionally we are, of course, strong in the area of ship-ping, a sector that was particularly resil-ient to the recent economic downturn.

Do you believe that Cyprus’ aspira-tions to become a regional energy hub are realistic?Absolutely. This is, in my opinion, a ma-jor future chance for mutual cooperation. Having served as Ambassador to the UAE before I came to Cyprus, I know about the dynamics that such a concept can

five minutes with...

Nikolai von SchoepffAmbassador of the Federal Republicof Germany

THENEW FACEOF CYPRUS

BANKING

COVER STORY

Cyprus had always

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THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS Gold 19

Challenges and Opportunities

BANK

OF

CYPR

US

NUMBER OF EMPLOYEES:

4,049

NUMBER OF BRANCHES:

134

COVER STORY

OOriginally called the Nicosia Sav-ings Bank, it began its operations in 1899 and continued under that name until 1912 when it was renamed Bank of Cyprus and rec-ognised as a public company. In 2013, following the decisions of the Eurogroup meeting on 25

March and the decrees issued by the Central Bank of Cyprus, the Bank found itself under Resolution from 25 March until 30 July 2013, during which time it was recapital-ised and restructured. In July 2014, Bank of Cyprus bolstered its balance sheet by sell-ing €1billion of shares to inves-tors including US private equity billionaire Wilbur Ross and the European Bank for Reconstruction and Development. After success-fully passing the ECB’s stress tests, it appointed the former head of Deutsche Bank Josef Ackermann as Chairman of the Board.

"As the economy is increasingly showing signs of recovery, we expect credit to also grow"

What are the main short-term (2015) objectives of the Bank’s man-agement?The past year has undoubtedly been

a year of great transformation for the Cyprus banking sector: it is now much smaller and

considerably better capital-ised, domestic payment

restrictions have been lifted and exter-nal restrictions have been relaxed to a great extent. Additionally, Eurosystem funding reliance has been considerably reduced, the regulatory framework and supervision have been greatly enhanced, the ECB Comprehensive Assessment has been successfully cleared and there are signs of stabilisation of the deposit flows.However, we cannot afford to be com-placent. A lot remains to be done and the challenges ahead may be daunting

if we fail to address them effectively.The most critical challenge being faced is, of course, the unacceptably high level of non-performance in the sys-tem’s loan portfolio. Tackling this issue is an absolute priority towards normal-ising the banking system. Regarding Bank of Cyprus, another important challenge is the reduction of Eurosystem funding reliance and the normalisation of the Bank’s funding structure. The enhanced capital posi-tion should facilitate access to the capi-

HEAD OFFICE:51, Stasinou Street, Ayia

Paraskevi, 2002 StrovolosP.O.Box 21472, 1599

NicosiaTel: 22122100Fax: 22378111

Website: www.bankofcyprus.com

KEY FINANCIAL INFORMATION

9M 2014

NET LOANS: €19.8

BILLION ASSETS:€27.5

BILLIONDEPOSITS:

€13.3 BILLION

PROFIT/(LOSS):

€76 MILLION

CET115.4%

NUMBER OF ATMS: 194

John P. Hourican, CEO

tal markets. We are also aiming to strengthen our deposit base in order to be able to further reduce Eurosystem lending reliance.

The amount of debt (household and corporate) is extremely high, compared to the EU average. Do you consider this unhealthy and is it a factor that could delay the recovery of the economy?Economic activity in Cyprus con-tinues to be subdued, thus contin-uing to pressure the performance of our borrowers. The general geopolitical unrest in the region (particularly the developments in Russia) presents an additional challenge for one of the country’s key GDP contributors – that of tourism. Appropriate measures need to be taken by the authori-ties in order to mitigate as much as possible any negative impact as well as to diversify the country’s revenue streams. Based on statistics published by Eurostat, private sector borrow-ing as a percentage of GDP in Cyprus is the second highest after Ireland. However, when taking into account the net financial assets of households, the problem is mitigated. According to eco-nomic experiences the recovery of economies with high private sec-tor borrowing tends to be slower. On the other hand, any reduction in interest rates is expected to have a significant impact on borrowers and hence the economy.Having said the above, one needs to bear in mind that, following the unprecedented events of 2013, the Cyprus economy has proven to be much more resilient than expected. The economy has done considerably better than initially anticipated, because of the resilience of some sectors, such as tourism and professional services, and because of its inher-ent flexibility. The banking sector has similarly been able to achieve much that would seem impos-sible a year ago. We can therefore

express some optimism about the future.

How is the Bank dealing with the issue of corporate Non-Performing Loans? What is the philosophy and approach to corporations with a high degree of debt? If it is viewed as unsus-tainable, what action will the Bank take?Tackling the issue of corporate Non-Performing Loans is an ab-solute priority.To effectively do so, there must be an appropriate foreclosure and insolvency legislation that is trans-parent and predictable and that will be effectively implemented by the authorities. This legislation should aim to protect the truly vulnerable but, at the same time, should prevent strategic defaults and should introduce the ap-propriate moral hazard into the relationship between banks and their borrowers. It is important to underline that we have no intention to pursue mass foreclo-sures on the homes of vulnerable borrowers; this option, after all, is not financially attractive. We must, therefore, focus on the real issue. Banks collect the savings of depositors and then lend them to those who wish to borrow. The country needs strong, simple and clear laws which encourage the safe gathering of deposits and the transformation of those deposits into long-term loans, thus creating economic prosperity; a framework that imposes the basic principle that “if you borrow money you should pay it back”.

Do you consider that the Bank’s provisions for impair-ment are adequate?We always make sure that our provisions for impairment are ad-equate and appropriate, taking in to account the level of collaterals held. As part of its announcement of the financial results for the nine months ended 30 September 2014, the Bank announced that it

would be reviewing the results of the ECB’s Comprehensive As-sessment with a view to ensuring that its accounting estimates and methodologies were appropriately aligned to take account of the observations and adjustments suggested by the Single Supervi-sory Mechanism as they pertain to the Asset Quality Review (AQR). This work is nearing completion and the findings confirm that this alignment will result in an incre-mental charge resulting in more elevated provisioning levels. Furthermore, in light of the dete-riorating economic conditions in Russia since mid-December 2014, the Bank has also proceeded to prudently reassess its operations in that country and increase the level of provisions for impairment of its loans and other assets there. This action reflects a deliberately more conservative stance regard-ing the Russian economic outlook and very significantly reduces the Group’s net exposure to that country. As a result, there will be an increased charge for provi-sions for impairment of loans for the fourth quarter of 2014. This charge will bolster the Bank’s prudence, improve provisioning coverage levels and better align some of the Bank’s methodolo-gies to take account of the AQR observations.

What is the Bank’s new lending philosophy as regards corpora-tions? Are there sectors to which it will give priority for loans?One of the most important prob-lems faced by the economy of Cyprus today is that new lending is difficult to proceed, largely be-cause households and businesses remain under pressure due to the crisis. As the economy is increas-ingly showing signs of recovery, we expect credit to also grow. This effort is supported by the EIB and European programmes, through which we have been ex-tending considerable credit in the last several months. Apart from

that, Bank of Cyprus is reviewing its corporate lending policy and will soon announce a new charter of rights and responsibilities of corporate borrowers. Our effort is concentrating on enhancing trans-parency, early warning systems for possible risks arising for our customers and on an overall better service that we want to provide.

There is a public perception that many banks are over-staffed. Is this true of your Bank and can we expect re-dundancies in the near future?Following the forced merger of the two Banks and the sub-sequent Voluntary Retirement Scheme that took place in July 2013, a lot of our employees chose to leave the Bank, result-ing in the loss of valuable skills and experience, especially in the area of core banking. As a result, our main issue at the moment is not whether we are overstaffed or not but, instead, our focus is on regaining the lost skill set through the development, retraining and redeployment of our staff. Our focus remains on identifying and promoting talent in the bank and on maxi-mizing the productivity of our employees, not necessarily on reducing their total number.

Are you planning any kind of management reorganisation?During the past year, our focus has been on successfully inte-grating our systems, policies and procedures, as well as on exploring a number of initiatives that will help us become a much more modern and competitive organisation. Revisiting our structure is one initiative that is being explored with the support of external consultants, aimed at increasing operating efficiencies on the one hand and, on the other hand, utilising the knowl-edge, skills and experience of our workforce to the best pos-sible degree.


cdbb

ank

NET LOANS

(PRELIMINARY): €345

BILLION

ASSETS:€457

BILLION

DEPOSITS:€395

BILLION

LOSS AFTER TAX

(PREMLIMINARY): €3.2

MILLION

NUMBER OF ATMS:

2NUMBER

OF EMPLOYEES: 144

NUMBER OF BRANCHES:

4 (2 IN CYPRUS, 2 IN RUSSIA)

COVER STORY

The Cyprus Development Bank Ltd. (CDB or cdbbank) was founded in 1963 by the Cyprus Government and was fully privatised in 2008. Prior to its privatisation, the Bank’s shareholders were the Cyprus Gov-ernment and the European Invest-ment Bank. In November 2014 the Bank was recapitalised with the injection of new equity by its existing and new shareholders. The Bank’s current shareholders are prominent Cypriot business fami-lies (50%) with a broad spectrum of international business activities, and

by Russian investors (50%) engaged in financial services. Following privatisation, CDB was drastically repositioned as a bou-tique corporate bank focused on providing custom-made banking and financial services to the business community in Cyprus – offered through the Bank and through its financial services subsidiary Global Capital Securities and Financial Services Ltd (cdbglobal). The CDB Group is also engaged in SME lending in Russia, in the area of Krasnodar, through its wholly owned niche banking subsidiary, the Investment Bank of Kuban (cd-brussia).The successful implementation of CDB’s strategic redirection has been the result of the effective blend of the CDB’s legacy and financial expertise as the island’s leading de-velopment finance institution, with its current outlook as a modern, flexible banking and financial ser-vices Group.

HEAD OFFICE:50, Archbishop Makarios

III Avenue, P.O.Box 21415, 1508 Nicosia

Tel: 22846500 Fax: 22846600

Website:www.cdb.com.cy



"A key driver of economic growth is the level of investment in the

productive economy"

"It is important to note that cdbbank has a differentiated credit portfolio"

Andri Georghiou, CEO

What are the main short-term (2015) objectives of the Bank’s management?In the current difficult eco-nomic environment, the Bank’s main short-term objective is to retain the confidence and trust of its clients through the prudent management of its business. Consequently, the Bank focuses on stabilis-ing and improving the quality of its loan portfolio and on the efficient handling of its liquidity position. The former involves constant monitoring and vigilant management of the loan portfolio so as to contain the level of Non-Performing Loans, as well as the execution of efficient and viable loan re-structuring solutions. The latter involves broadening and diver-sifying its deposit base and to this end, the Bank has on offer a full array of attractive deposit

schemes designed to meet the needs of institutional and retail depositors.

The amount of debt (house-hold and corporate) is ex-tremely high, compared to the EU average. Do you con-sider this unhealthy and is it a factor that could delay the recovery of the economy?While it is undeniable that the level of extended credit in the Cyprus economy well exceeds the norms of the European Un-ion, the recovery of the econo-my is not solely dependent on the resolution of this matter. At cdbbank, we consider that a key driver of economic growth is the level of investment in the productive economy. What is needed is the existence of viable investment proposals for the creation of business ventures which can compete in the glob-al arena and which can attract foreign investment. The exist-ence of a robust, efficient and stable regulatory, tax and legal environment would certainly contribute to the attainment of such a strategic objective.

How is the Bank dealing with the issue of corporate Non-Performing Loans? What is the philosophy and approach to corporations with a high degree of debt? If it is viewed as unsustainable, what action will the Bank take?As an institution set up to support the development and growth of the business sector in Cyprus, it is important to note that cdbbank has a differ-entiated credit portfolio which consists mainly of exposures to local businesses. Moreover, we have always adopted prudent and careful lending criteria, based on the assessment of the applicant’s expected repayment capability. Our policy is to sup-port and assist viable and co-operative clients to rationalize their business operations and perform restructuring of loan exposures that are appropriate to each specific case.

Do you consider that the Bank’s provisions for impair-ment are adequate?The Bank’s policy on loan provisioning has always been to be prudent and conservative

and thus to provide adequately against problematic loans. This policy continues to the present.

What is the Bank’s new lend-ing philosophy as regards corporations? Are there sec-tors to which it will give pri-ority for loans?The events of the past two years have made banks – cdbbank in-cluded – justifiably more risk-averse. Top on their agenda is the restoration of confidence in the banking sector which, in return, is predicated on the need for banks to preserve their capital base and liquidity buffers. As a result, banks at present are preoccupied with the management of their exist-ing loan portfolios which, given the structural problems of the Cyprus economy, is in itself a Herculean task. Nonetheless, cdbbank, true to its tradition, would not hesitate to look at sound lending proposals for viable projects or corporates which are adequately capital-ized and admittedly bankable, with clear business and financ-ing plans and good and proven track record and management.


CO-O

PERA

TIVE C

ENTR

AL B

ANK

NET LOANS:

€10.4 BILLION

CET1:13.4%

DEPOSITS: €12.2 BILLION

PROFIT/(LOANS):

€109.5 MILLION

NUMBER OF

BRANCHES: 295


2,700

HEAD OFFICE: 8, GrIgorisAfxentiou

Street, Nicosia. Tel: 22743000

Website:www.ccb.coop.com.cy

NUMBER OF ATMS: 185

COVER STORY


The Co-operative Central Bank was established in 1937 and is the central body of the 18 co-operative credit institutions. Over the years, the bank has played a key role in the develop-ment and growth of the Cyprus economy and society, particularly in helping the poor and needy.Together with the 18 co-opera-tive credit institutions, it is the biggest financial institution in Cyprus. After the successful results of

the stress tests, the Co-operative Credit sector became one of the best-capitalized financial insti-tutions in the eurozone. It has entered 2015 with new strength, launching important changes which will make it even more modern, flexible and effective and ready to meet the new needs of its members and clients and of society. The aim is to create, in cooperation with the Boston Consulting Group, a new Euro-pean co-operative sector based on successful international models, though the transfer of expertise and the adoption of best prac-tices.The target remains the same: to provide the best service to people and society as a whole.In 2014 the co-operative credit sector returned to profitability an-nouncing net profits for the nine months ended in September of €109.5 million.

9M 2014

ASSETS: €13.9

BILLION

"The Co-ops need to refocus on their traditional business areas"

Marios Clerides, CEO

What are the main short-term (2015) objectives of the Bank’s management?We have three main objectives: to maintain the healthy inflow of deposits, to start giving new loans to restart the economy and, last but not least, to con-tinue our efforts to manage the NPL portfolio.

The amount of debt (house-hold and corporate) is ex-tremely high, compared to the EU average. Do you con-sider this unhealthy and is it a factor that could delay the recovery of the economy?Yes, Cyprus does have a twin debt problem – public sector debt and private sector debt. I had highlighted this very is-sue before the crisis at an IMH seminar in 2010. It is, indeed, a problem hampering recovery since neither the government nor the private sector can bor-row more so as to start spend-ing, which would restart the economy. Recovery in this sense will come from “foreign” spending in Cyprus – exports, tourism or foreign investments in the country.

How is the Bank dealing with the issue of corporate Non-Performing Loans? What is the philosophy and approach

to corporations with a high degree of debt? If it is viewed as unsustainable, what action will the Bank take?To begin with, let me say that the Co-op Movement does not have big corpo-rate loans, being in nature an SME/Retail Banking institution. Never-theless, the same principles apply in examining an SME loan as a Corporate loan: (a) Are there any non-core assets that the company can sell to reduce its debt burden? If yes, give them time to do so with a payment “holiday”; (b) If not, could the solution be an extension of the duration of the loan to make instal-ments smaller and more affordable? (c) If this is not possible, can lower interest rates make the loan viable? (d) If none of (a), (b) or (c) works, then examine whether the company would be viable if a small part of the loan were to be written off. Obviously, some other solutions

that might work on bigger cor-porations, such as debt to equity swaps and capital increas-es through the sale of part of the

company to outside investors, do not hold for SMEs.

Do you consider that the Bank’s provisions for

impairment are adequate?Yes. The recent As-

set Quality Review (AQR) performed

as part of the pan-European stress test shows only a

“negligible” need for extra provisions.

What is the Bank’s new lending philos-ophy as regards cor-porations? Are there sectors to which it will give priority for loans?The Co-ops need to refocus on their tra-ditional business areas – loans to SMEs, loans with a wider develop-mental impact, such as those to community projects, energy-saving projects, etc., but we

must also adapt to the new business landscape in our

traditional areas of activity such as agriculture, with organically produced agro-products, etc.

There is a public perception that many banks are over-staffed. Is this true of your Bank and can we expect redundancies in the near future?We have recently been increas-ing employment in some of our departments, e.g. NPL manage-ment, so I cannot say we are overstaffed. In the future, if NPLs are reduced, we might have some excess capacity but not in the near future. That doesn’t mean that we will not seek to become leaner by reorganising the way we do business, for example by sharing resources, common operating procedures, IT systems, cards, etc.

Are you planning any kind of management reorganisation?We had a reorganisation very recently. Re-reorganisation is always on the agenda as a means of increasing efficiency. What one should avoid is very frequent reorganisations that disrupt the operation of the bank and create uncertainty among the staff about their future. Let us not forget that banking is a “personalised” service – the relationship of the client with the branch manager or the people in the bank is key to customer retention.


EURO

BANK

CYP

RUS

NET LOANS:

€1.1 BILLION

ASSETS:€3.6

BILLION

DEPOSITS:€3

BILLION

PROFIT/(LOSS):

€31.3MILLION

NUMBER OF ATMS:

0NUMBER

OF EMPLOYEES: 238

NUMBER OF BRANCHES:

8

COVER STORY

Eurobank is a European banking organisation with total assets of €67.7 billion, offering universal banking across eight countries. In addition to its dynamic presence in Greece, where it is one of the country’s largest banks, it holds leading positions in Bulgaria, Ro-

mania and Serbia, offers discerning Wealth Management services in Cyprus, Luxembourg and London and is also present in Ukraine. Eurobank Cyprus, which began its operations in 2007, offers a wide range of products and services in Corporate and Investment Banking, Private Banking and International Business Banking, adding value to the development of the services provided by Cyprus as an important financial centre. With an established presence in Nicosia, Limassol, Larnaca, Paphos and, recently, Paralimni, the Bank continues to develop its opera-tions to the benefit of its customers throughout the island, providing effective solutions to meet their rap-idly evolving and complex needs.

HEAD OFFICE:41 Archbishop Makarios III

Ave., 1065 NicosiaTel: 22208000Fax: 22776722

Website:www.eurobank.com.cy


CET135.6%


"The Bank continues to finance corporations with sound financial

results and a positive track record"Michalis Louis, CEO

What are the main short-term (2015) objectives of the Bank’s management?Since the commencement of the Bank’s operations in 2007, the major objectives set at the time, which continue to form the basis of the way we manage the Bank, are: • To maintain a leading posi-tion in the areas of Private Banking, Corporate & Invest-ment Banking and Interna-tional Business Banking.• To make the Bank’s name synonymous with excellent service.• To be a key player in financ-ing the economy.• To continuously improve the Bank’s customer-centric ap-proach, based on quality, trust, transparency and reliability.• To maintain – on an ongoing basis – healthy key economic indicators such as strong liquid-ity with a Loans to Deposit Ratio always maintained below 60%,a strong Capital Adequacy Ratio, healthy recurring profit-ability, a low Non Performing Loans Ratio and a low Cost Base.Eurobank Cyprus Ltd, despite the economic crisis and its con-sequences, managed to achieve the set objectives and is in a position, despite any prevailing uncertainties, to continue in the same successful way during 2015.

The amount of debt (house-hold and corporate) is ex-tremely high, compared to the EU average. Do you con-sider this unhealthy and is it a factor that could delay the recovery of the economy?The levels of household and corporate debt compared to GDP are, indeed, higher than the EU average and this was an imbalance that built up over the years as well as being due to the way the economy was functioning. With the new methodologies introduced, the change in the overall risk appetite of Banks, the change of household and corporate perceptions towards leverage as well as real signs of growth are expected to reverse the ratio at a slow but steady pace. Al-though one could assume that the above changes might delay the recovery, the convergence into more healthy practices lays the foundations for a more sus-tainable recovery.

How is the Bank dealing with the issue of corporate Non-Performing Loans? What is the philosophy and approach to corporations with a high degree of debt? If it is viewed as unsustainable, what action will the Bank take?Eurobank Cyprus has one of the lowest non-performing loan (NPL) ratios in the Cyprus

Banking system, which is cur-rently in the low single digit numbers. The Bank, which follows a very conservative lending policy, closely moni-tors its loan portfolio and is in continuous contact with its customers to identify any potential problems early and proactively offer solutions in cooperation with clients. At the same time, the Bank, hav-ing knowledge of the difficult years that the economy and companies have gone through, is always willing to give all the necessary time and assistance to cooperative clients in financial difficulties, to restructure the way they operate as well as how they do business in order to improve their financial posi-tion. If various remedial actions or attempts to reverse the nega-tive trends prove unsuccessful and the corporation proves to be non-viable, then a dedicated department within the Bank holds the responsibility to take any other actions needed to safeguard the Bank’s interests, always in accordance with the regulatory guidelines and Di-rectives.

Do you consider that the Bank’s provisions for impair-ment are adequate?Eurobank Cyprus is very pru-dent and fully complies with all related regulatory guidelines

and Directives of the Central Bank of Cyprus. In fact, the Bank performs specific provi-sions for all non performing loans (NPLs) irrespective of the amount of the loan and, on top of this, maintains a substantial amount in general provisions as a safety buffer which comfort-ably safeguards against any un-foreseen negative changes.

What is the Bank’s new lend-ing philosophy as regards corporations? Are there sec-tors to which it will give pri-ority for loans?The Bank continues with the same philosophy that has led to its success, which is to finance corporations with sound finan-cial results and a positive track record, as well as viable projects in the Cyprus economy. The Bank considers tourism, infra-structure, energy, specialized agriculture, education, health-care and shipping as areas with great prospects. It is also worth noting that the Bank’s financial position and, especially, the Bank’s strong liquidity position allows it to remain a key player in the Cyprus market for financing vi-able business proposi-tions.


HELL

ENIC

BANK

NET LOANS:

€33 BILLION

ASSETS:€69

BILLIONCET1

(AFTER CAPITAL INCREASE €204

MILLION)12.8%

DEPOSITS:€61

BILLION

PROFIT/(LOSS):

€125 MILLION

NUMBER OF

BRANCHES: 64


1,400

HEAD OFFICE:Corner of Limassol Avenue

& 200 Athalassa Avenue, 2025 Strovolos, Nicosia.

P.O. Box 24747, 1394 Nicosia

Tel: 22500000Fax: 22500050

Website:www.hellenicbank.com

NUMBER OF ATMS:

69

COVER STORY


9M 2014

H ellenic Bank Group commenced operations in 1976. Within a relatively short period of time, it had managed to establish itself as one of the largest banking and financial institutions in Cyprus. It also operates four Representa-tive Offices, in Moscow, St. Pe-tersburg, Kiev and Johannesburg.Alongside traditional banking products, Hellenic Bank Group also provides a wide range of

financial services, including leasing facilities, factoring, brokerage services, insur-ance, portfolio manage-ment, investment banking, mutual funds, private bank-ing and custodian services.

Hellenic Bank Group has adopted a customer-centric

structure to enable it to meet the differing requirements of its wide and diverse client base. To this end, a number of Business Divi-sions have been formed to cater for particular client segments, together with a number of corpo-rate support Units.Hellenic Bank Group recently successfully completed the share capital increase that commenced in November 2014, raising €204 million in an adverse and chal-

lenging economic environment. Taking into account the capital raised through the recent capital increase, the Group’s Common Equity Tier 1 Ratio (with Transi-tional Provisions) on 30 Septem-ber 2014 following the conver-sion of the Contingent Convert-ible Securities 1 into shares stood at 12.8%, which significantly exceeds the corresponding mini-mum regulatory ratio.The underlying performance of Hellenic Bank continues to re-cover. Profit from ordinary opera-tions before provisions for the first nine months of 2014 increased by 39% compared to the correspond-ing period in 2013 on the back of increased net interest income and careful cost control. Sustained lower funding costs resulted in increased net interest income of €156.3 million, up 17%, and improved net interest margin of 3.35% (previous year: 2.75%). Concerted action to resolve loan book issues led to an increased impairment provision over Non Performing Loans of 46% at 30 September 2014, up from 41% at December 2013. Provisions for the nine months amounted to €259 million which lead to a €125 million loss attributed to the shareholders of the Bank.The Bank has a net Loans-to-Deposits ratio of 53% and neither exposure to the European Central Bank or the Emergency Liquidity System nor dependence on the interbank funding market.

"We put our money where our mouth is"

Bert Pijls, CEOWhat are the main short-term (2015) objectives of the Bank’s management?Restructuring, a reduction in the number of non-performing loans and contributions to the efforts for economic recovery form Hellenic Bank’s roadmap in 2015. The key task is to deal with non-performing loans and carry out the consequent restructuring, which is our primary objective.Therefore, our efforts focus on speeding up the restructuring process and on becoming more ef-ficient and more reliable partners for our cooperating customers. We have established a special department consisting of experts with great experience in handling such matters.However, Hellenic Bank’s fore-most goal is to play a leading role in reviving the economy. It has the ability and assets to do so. Its capital and liquidity allow it to be a dynamic player in the market, financing reliable and solvent businesses that turn the crisis into an opportunity. We put our mon-ey where our mouth is. As you may recall, we recently announced a new lending programme for new Cypriot enterprises, in col-laboration with the European Investment Bank, at interest rates as low as 3%.However, there’s more good news coming from Hellenic Bank. Let me just tell you that this year we will more than double our loans compared to 2014 and we will reduce the cost of money even further. In 2015, Hellenic Bank is gathering its strength and it is reintroducing itself to the market, its customers and the economy.

The amount of debt (household and corporate) is extremely high, compared to the EU average. Do you consider this unhealthy and is it a factor that could delay the recovery of the economy?The fact that the Cypriot econo-

my has performed better than ex-pected so far and the prospects for recovery create a positive climate that helps boost the economy. Structural reforms in the public sector and the completed restruc-turing of credit institutions are the starting point for overcoming the crisis. Even though the economic climate is improving and, there-fore, there is an increased demand for loans, the market is lacking good-quality demand because of the already high level of indebted-ness of Cypriot enterprises and households. Additionally, the increased level of non-performing loans takes a toll on the balance sheets of banks and prevents the issuing of new loans.The reform by the government bill on insolvency and the adop-tion of new policies for strategic growth and for battling unem-ployment will be invaluable tools to effectively address the increased stock of Non-Performing Loans and allow credit flows to the real economy. Furthermore, the implementa-tion of institutional reforms is an important pillar for improving the business environment in order to promote foreign investments which, in turn, will increase the access to credit among small and medium enterprises.

How is the Bank dealing with the issue of corporate Non-Performing Loans? What is the philosophy and approach to corporations with a high degree of debt? If it is viewed as unsus-tainable, what action will the Bank take?Look, we can’t lump everyone together in the same category.They’re not all the same. Certain businesses are willing to collabo-rate but are facing temporary dif-ficulties in the repayment of their loans. However, there are others that, despite being able to pay, are strategically and craftily refusing to honour their obligations.

It is our philosophy at Hellenic Bank to support those who are cooperating and help them through sustainable restructuring plans. However, we are deter-mined to collect the loan amounts outstanding from those that are choosing strategically not to coop-erate and not to repay their debts as they fall due. This is why we look at each case separately and offer tailor-made solutions. Our aim is not to have reliable busi-nesses close down; our aim is to support such businesses and make sure that they carry on operating and offering jobs.If we see that a business in un-sustainable, we will jointly try to find other solutions to reduce their borrowing, in accordance with the Central Bank’s code of practice. We will never act in a punitive manner.

Do you consider that the Bank’s provisions for impair-ment are adequate?They are adequate. Firstly, Hellenic Bank’s loss provisions indicator for non-performing loans is the highest in the market. Specifically, the forecast provi-sions amount to 46% of our loan portfolio. Secondly, we are adequately protected in stress tests scenarios and we can absorb shocks in adverse conditions. Let me remind you that although we had capital needs of €105 mil-lion, we received €204 million, something which reassures the confidence that existing and new shareholders have in Hellenic Bank.

What is the Bank’s new lend-ing philosophy as regards corporations? Are there sectors to which it will give priority for loans?Thanks to its prudent and con-sistent policy, Hellenic Bank enjoys four key comparative advantages: It is not trapped between the cogs of the ELA, it

did not place a levy on deposits, it did not need state support and it has a liquidity of €3.5 bil-lion.With these weapons in our armoury, we are able to support and finance businesses. Our main focus is on the sectors of industry, tourism and services and particularly on businesses which hire and employ young people. However, let it be clear that we do not rule out any busi-ness, from any sector, as long as it is sustainable and creditworthy.

There is a public perception that many banks are over-staffed. Is this true of your Bank and can we expect redundancies in the near future?During summer 2013 we offered to our employees a voluntary retirement scheme, which resulted in the retirement of 11% of our existing staff. Therefore, the num-ber of employees has already been reduced. In addition, the work-load has not been reduced so, at the moment, Hellenic Bank is not overstaffed.However, respond-ing to the current conditions, we are looking for ways to become more efficient and to improve the quality of services provided to our customers. Therefore, we are pres-ently hiring in those sectors where we need to. In fact, over the last few weeks we have been carrying out tests and interviews for new personnel, and we have also been employing new graduates for a year now through the programme run by the HR Development Authority.

Are you planning any kind of management reorganisation?As I said earlier, our goal is to be-come more efficient and to offer our customers services of an even higher quality. It is, therefore, our strategy and our intent to have the best professionals in the right positions, by training and devel-oping our people and hiring the right talent.


PIRA

EUS

BANK

(CYP

RUS)

LOANS: €840

MILLION

ASSETS:€1.3

BILLION

DEPOSITS:€1.2

MILLION

PROFIT/(LOSS):

(€27.8 MILLION) CET1

(GROUP): 13.4%

NUMBER OF ATMS:

15NUMBER

OF EMPLOYEES: 303

NUMBER OF BRANCHES:

15

COVER STORY

Headquartered in Athens, Greece, with more than 22,000 employees in 10 countries mainly in South East Europe and Eastern Mediter-ranean, Piraeus Bank Group offers a full range of financial products and services to approximately 6 million customers. Piraeus Bank was established in 1916. Almost 50 years later, in 1963, it was integrated into the Emporiki Bank Group in Greece. In 1975 it came under state control within the Emporiki Bank Group

and was privatised in 1991. Piraeus Bank (Cyprus) Ltd was established in 2008 following the acquisition of Arab Bank’s branch network in Cyprus. In the wake of the Eurogroup’s decision in March 2013, Piraeus Bank acquired all deposits, loans and branches in Greece of Bank of Cyprus, Cyprus Popular Bank and Hellenic Bank, including the loans and deposits of their subsidiaries in Greece (leasing, factoring) and In-vestment Bank of Greece IBG. It also acquired the custody, settlement and related services in Greece of Bank of Cyprus, Cyprus Popular Bank and Hellenic Bank as well as the mutual funds distribution business of Cyprus Popular Bank. Total assets of the Group amounted to €86 billion, net loans to €56 billion and customer deposits to €55 billion on September 30, 2014.

HEAD OFFICE:1, Spyrou Kyprianou

Avenue, 1065 NicosiaP.O.Box 25700, 1393

NicosiaTel: 80011800

Fax: 22760890 Website:

www.piraeusbank.com.cy


9M 2014


"We now have a banking sector focused on debt collection and loan-restructuring rather than new lending" George Appios, CEO

What are the main short-term (2015) objectives of the Bank’s management?The main objectives and top pri-orities of 2015 are expected to be:1. The effective management of non-performing loans within the revised code of conduct and legal framework that are expected to be finalized and completed at the beginning of 2015.2. The adoption and the imple-mentation of the new banking regulatory and compliance frame-work created after the implemen-tation of the Memorandum of Understanding and the takeover of banking supervision of all eurozone banks by the European Central Bank.3. The redefinition of the business banking model that needs to be adjusted to the new market condi-tions, taking into consideration the lack of confidence on the part of clients and the requirements for higher returns for shareholders that reflect the risks taken.

The amount of debt (household and corporate) is extremely high, compared to the EU average. Do you consider this unhealthy and is it a factor that could delay the recovery of the economy?The amount of public debt is a consequence of excessive credit expansion between 2006 and 2009. It is largely related to prop-erty and land development and, to a lesser degree, to consumption. This resulted in the property value “bubble” that is now deflating, creating serious problems to debt holders and the economy as a whole. The bulk of these debts are currently non-performing but still on the balance sheets of the banks. As a result we now have a banking sector focused on debt collection and loan-restructuring rather than new lending, whilst the Public Sector is not in a position to bor-row funds. The combination of

the two will undoubtedly delay the economic recovery.

How is the Bank dealing with the issue of corporate Non-Performing Loans? What is the philosophy and approach to corporations with a high degree of debt? If it is viewed as un-sustainable, what action will the Bank take? The management of non-per-forming loans is governed by the relative Directive of the Central Bank, which defines the internal procedures to be followed and the banks’ code of conduct towards customers that fall in arrears. The target is to facilitate the restruc-turing of loans of cooperative customers with viable prospects. The effective application of this Directive requires changes to the legal framework that will lift legal and procedural obstacles regard-ing mortgaged property. This will force uncooperative customers with viable debts to cooperate for the restructuring of their loans and, at the same time, it will as-sist in the workout of non-viable loans. The legal framework will also provide protection to groups of lenders, whose loans became non-viable due to the financial cri-sis. All these are included within Cyprus’ Memorandum of Under-standing obligations and must be fully implemented immediately.In 2014 the Banks created Special Units for the implementation of all the above. The management of non-performing loans has, up until now, been ineffective with the majority of restructur-ings being achieved by mutual agreements between the banks and cooperative customers. Large borrowers are using the current law procedures to act as strategic defaulters and remain non-cooperative. Once the new framework becomes operational, banks will initially put great effort into understanding and absorb-

ing all the provisions of the new legislation and regulations. Selling and auctioning procedures will probably be implemented initially on non-cooperative clients and not on a massive scale. The first cases will most likely involve marketable properties of large value. Undoubtedly, banks are required to balance the benefit to their balance sheet with the least possible loss that may occur because of the drop in the value of real estate (excessive offer and decreased demand) with a result-ing depletion of their capital base. Competition and the different strategic priorities of the various banks make this balancing effort extremely difficult.

Do you consider that the Bank’s provisions for impair-ment are adequate?The provisions for impairment are an accounting estimate at a specific point in time and they are governed by International Ac-counting Standards and Central Bank rules. The estimate is always subject to the judgment of the management, which is confirmed by professional external auditors. At this point in time, estimates are based to a large extent on future expectations of movements in property values in a market with inadequate supply and demand fundamentals, and this creates an issue. We rely on professional property valuation companies and experts to arrive at a prudent figure at the end of each year. The subsequent provisions included in the audited financial statements are considered to be adequate.

What is the Bank’s new lending philosophy as regards corpo-rations? Are there sectors to which it will give priority for loans?The current economic environ-ment gives rise to volatility and uncertainties on the level of

future earnings for both busi-nesses and individuals. The sub-sequent credit risk level reduces the banks’ desire to lend money. At the same time, and for the same reasons, entrepreneurs and individuals are reluctant to invest capital in new ventures. The combination of the above two factors suggests that credit expansion in the next twelve months is not likely to be sub-stantial. Banks should adjust to the new market conditions in Cyprus. The present economic environment increases the cost of credit risks and future provi-sions for bad debts cause serious issues to the bottom line. In addition, the continuous lack of access to international markets for all the Banks in Cyprus means they have to rely for financing on expensive domes-tic deposits with interest rates being at least 2% higher than that of other European Banks. The current imbalance between loans and deposits in the system worsens the situation. Increased regulatory capital requirements force shareholders to increase their capital contribution and restrict the dividend pay-out. At the same time, customers and the public at large in Cyprus have lost their confidence and trust in the banks. Given all the above, banks are being asked to think more radi-cally and innovatively in order to form a new business model which will initially inspire cus-tomers and regain their trust while focusing on restoring prof-itability and the required return to shareholders. The offered products, channels and services, and the way they are distributed to the clients, should be revised. The various options must be faced with an open mind and we must be open to collabora-tions with organisations from other sectors.



USB B

ANK

NET LOANS:

€394 MILLION

ASSETS:€685

MILLION

CET1 9.11%

DEPOSITS:€621

BILLION

PROFIT/(LOSS):

€4.5 MILLION

NUMBER OF

BRANCHES: 14


230

HEAD OFFICE:83, Digeni Akrita Avenue,

1070 Nicosia P.O.Box 28510, 2080 Nicosia

Tel: 22883333 Fax: 22875899

Website:www.usbbank.com.cy

NUMBER OF ATMS:

17

COVER STORY


9M 2014

Yialousa Savings Bank (YSB), established in 1925 in Yialousa, in what is now the Turkish-occupied part of Cyprus, was

the 10thlimited company to be registered on the island. In 1996, Universal Life acquired 30% of YSB and on 10 July 1996, YSB was renamed Universal Savings Bank Limited.

Following the change in the shareholder structure in

February 2009 and within the framework of its strategic plan for innovative and efficient rede-velopment and growth, the Bank created a new, contemporary and dynamic corporate identity and was renamed USB Bank PLC, responding to the new challenges of the continuously changing financial sector. The new name maintained the Universal Savings Bank acronym, thus commu-nicating respect for its heritage and, at the same time, the way

it was looking to the future. It marked the start of a new dy-namic era for the Bank, investing in people, in new technology with new processes and in new products and services that offer real solutions to our customers and high quality services. In 2011, USB Bank became a member of the International BLC Bank–FRANSABANK Group, the fourth-largest bank-ing Group in Lebanon with an active presence in nine countries. Through an innovative and dy-namic approach, USB Bank aims to support its customers with integrity and professionalism, offering flexible solutions tailored to their traditional and newly formed needs. USB Bank focuses on growing its business locally and internationally, capitalizing on the opportunities arising from the Group’s wide network and leveraging on their know-how and expertise, while benefiting from the continuous support of BLC Bank.USB Bank offers a full range of financial services in the Retail, Corporate and International Di-visions, through a network of 14 branches throughout the island, specialised Corporate Banking Units, International Business Units in Nicosia and Limassol and a Representative Office in Moscow, Russia.

" The intention of the bank is not to foreclose mortgaged properties"

Andreas Theodorides, CEO

What are the main short-term (2015) objectives of the Bank’s management?The current economic environ-ment requires prudent man-agement. Our objective is to manage credit risk effectively and address the issue of non-performing loans in an efficient way through close monitoring, viable and sustainable restruc-turings. Our objective is to reverse the increasing trend in non-performing loans and the Bank is working closely with its clients to find solutions and to assist them during these dif-ficult times. In a volatile and uncertain environment, liquid-ity and capital adequacy are areas of continuous focus and review.In an effort to stimulate the growth of the economy and with the support of our Group, we are ready to finance corpo-rate customers for new projects and productive activities as well as working capital needs. To-wards the middle of 2014 the Bank announced a new hous-ing loan available to households while we are planning to intro-duce more retail products in 2015. At the same time, we aim at the effective supervision of the work and activities of the Bank in order to ensure quality of service, compliance with the Central Bank of Cyprus Direc-tives and the legislative frame-work. We will continue to im-plement sound corporate gov-ernance principles and to adapt policies and procedures aiming at full transparency. It is of utmost importance to continue safeguarding the interests of our stakeholders-shareholders, de-positors, clients, our people and society by acting responsibly

and in a prudent manner. The bank’s operating environment is undergoing a whole transfor-mation that necessitates close monitoring and readjustment.

The amount of debt (house-hold and corporate) is ex-tremely high, compared to the EU average. Do you con-sider this unhealthy and is it a factor that could delay the recovery of the economy?The amount of debt accumu-lated over the years, especially during the credit boom of the banking sector after the island’s accession to the EU, is one of the highest in the euro area, despite the efforts of deleverag-ing over the past year. This high private sector indebted-ness affects the management of the increasing number of non-performing loans and is a negative factor in the recovery of the economy. It has a direct negative effect on the dispos-able income of households and is directly linked to increasing non-performing loans in the banking system with all the negative consequences to the economy and the banks. In ad-dition, high corporate debt in relation to their turnover and income generation jeopardizes the viability of corporations and hinders their growth.

How is the Bank dealing with the issue of corporate Non-Performing Loans? What is the philosophy and approach to corporations with a high degree of debt? If it is viewed as unsustainable, what action will the Bank take?We do realise the difficulties that corporate customers, as well as individuals, are facing due to the current economic

conditions, the fall in con-sumption, and the lack of liquidity in the market. Our objective is to assist our clients to overcome this situation as far as possible. On a case-by-case basis we are analysing the new circumstances of our clients and the impact on their financial standing and we are focusing on finding solutions that will be mutually beneficial to both clients and the Bank. In this admittedly difficult task, the cooperation of clients is a key element in order to reach a viable and sustainable solution in line with the requirements of the relevant Directives of the Central Bank of Cyprus based on which we need to evaluate a substantial volume of information such as financial statements, cash flow projec-tions, feasibility studies, etc. In the case of non-cooperating clients, the Bank has no other option than to initiate legal procedures in line with the Ar-rears Management Directive of Central Bank of Cyprus. It must be stressed that the intention of the Bank is not to foreclose mortgaged properties and that this is rather a measure of the last resort. That is why we always try to find alterna-tive solutions and proposals for the repayment of outstanding debts.

Do you consider that the Bank’s provisions for impair-ment are adequate?The financial statements of the Bank are prepared in accord-ance with the International Financial Reporting Standards as adopted by the European Union and the requirements of the Cyprus Companies Law, subject to audit by independent

external auditors. The Bank re-views its loans and advances to assess whether a provision for impairment should be recorded in the income statement. Man-agement is required to estimate the amount and timing of future cash flows in order to determine the level of provision required and, as a result, the calculation of the impairment allowance involves judgment. Estimates are based on assump-tions about a number of factors and therefore actual impair-ment losses may differ. A very important factor for the estima-tion of provisions is timing and the expected receivables against the outstanding balances. In the past two years, given the negative economic climate, the increasing number of non-performing loans and the de-terioration of real estate prices, provisions for impairment of loans and advances have been increased, substantially reflect-ing the increased credit risk.

What is the Bank’s new lend-ing philosophy as regards corporations? Are there sec-tors to which it will give pri-ority for loans?We consider that it is of paramount importance that the banks support the Cyprus economy, which needs liquidity to overcome the current situa-tion and attain fiscal rectitude.However, any lending should be carefully analysed and supported by a viable business proposi-tion and plan. We are ready to provide lending in cases that satisfy the above criteria in our effort to support and restart the economy. We believe that all sectors play an important role in the economy and we evaluate each case in its own right.


SPREADING THE WORD

COMPANY PROFILE

Gold: TMF Group originated in the Netherlands. How did it develop into such a huge global group?Alex Hooft van Huysduynen: We started out in 1988 as a rather traditional fiduciary services firm with two offices in the Netherlands, one in Switzerland and one in the Antilles. After the collapse of the iron curtain, many European and American firms were looking to exploit oppor-tunities in Central and Eastern Europe and we followed these clients to countries like Hungary, Romania and Bulgaria and offered them services such as managing their payroll and taking care of their company registration, tax compliance and bookkeeping needs. We were essentially the first firm to do that and, at the same time, we also acquired practices from Big Four companies in many Central and Eastern European countries. They could not audit clients and do their ac-counting too, so they needed to make choices and we took advantage of the opportunity and bought out many local practices. By the time I joined the company in 2005 we were a pan-European organisation employing 1,200 people. We then bought a number of practices from KPMG and Ernst & Young in Latin America, thereby establishing TMF Group throughout the Americas and, ever since, we’ve been extend-ing our presence throughout Asia and Oceania. We are also extending our footprint throughout

Africa and TMF Group Cyprus is part of our Middle East & Africa region.

Gold: And you are no longer just a provider of fiduciary services?A.H.V.H.: The fiduciary side accounts for 50% of our business. We offer professional outsourced business services to large multinationals that aspire to roll out their commercial operations in 20-30 countries at the same time. TMF Group is the only service provider with the scope and the breadth to undertake such a project.

Gold: What was behind the decision to open an office in Cyprus in 2010?A.H.V.H.: We were quite late opening in Cyprus because we had actually been thinking about it for a long time before it finally happened. Initially we asked a number of local service providers to join our network but none of them were ready for such a move so the Group decided to establish a greenfield operation here. Previously, we had been a bit worried about the island’s reputation – we had heard all kinds of stories about Russian oligarchs abusing Cyprus for their own purposes – but by 2010 we had concluded that a suffi-ciently strong regulatory framework was in place and we felt comfortable enough to come here. The core business of the Cyprus operation is fidu-ciary and a significant part of our portfolio relates

2013 was an especially interesting year for TMF Group. It celebrated its 25th anniversary and its growth from a small Netherlands-based fiduciary firm into a global

group operating in more than 80 countries. It was marking its third year in Cyprus when the financial crisis rocked the island’s economy and the banking sector threatened

to bankrupt the country. But Cyprus has picked itself up, TMF Group is still here, and, as Alex Hooft van Huysduynen, Managing Director, Malta and Cyprus, recently explained to Gold, the next 12 months will see a major effort aimed at convincing its

global clientele that Cyprus is on the road to recovery.

By John Vickers, Photograph by Jo Michaelides



to outsourced business services to major pro-viders of services to oil and gas companies, for example. They are typical clients for whom we do payroll and bookkeeping, located in other countries such as Israel, Malta and elsewhere.

Gold: Almost two years on, you are still here but how did you react to events in March 2013?A.H.V.H.: We started our operations in Cyprus in 2010 and the situation was already clear enough for us to inform our five-star cli-ents to be very careful when opening accounts with Cypriot or Greek banks. Consequently, none of them had significant deposits in Cyprus and we didn’t have a great deal of explaining to do in March 2013. Our clients were not affected. Since then, however, we have seen our own revenues growing only marginally. What happened was a severe blow to the reputation of Cyprus as an international financial centre and I guess it will take at least another year before that reputation is restored.

Gold: What’s your view of the way that the Government has dealt with the crisis and its aftermath?A.H.V.H.: I believe it has done a lot of good things for our industry, such as introducing the regulatory framework for administrative service providers which was very welcome, and we are now seeing new initiatives such as the framework for Alternative Investment Funds. We would also like to play a part in this and help establish Cyprus as a funds jurisdic-tion. We don’t expect results in the near future but if we can benchmark Cyprus against Ireland, Luxembourg and Malta by seeing what they do well and try-ing to replicate it, I believe that in 4-5 years we will manage to attract investment managers to Cyprus.

Gold: Are you generally optimistic about Cyprus’ future?A.H.V.H.: Mid-to-long term? Definitely. Throughout my career, this industry has faced challenges and changes but helping multina-tional companies cross borders and assisting them with their investments are services that will always be needed.

Gold: What areas do you think need im-proving if Cyprus is to restore and maintain its reputation as an international business centre?A.H.V.H.: The Government can further improve the services of the Registrar of Companies and the tax authorities and it


is already working on these. For investors in the financial services industry Cyprus is quite an easy jurisdiction to do business in so there are no particular issues here that you would not find elsewhere.

Gold: How does Cyprus compare with other jurisdictions in which TMF Group operates?A.H.V.H.: I think that the Netherlands, Ireland, Luxembourg and Malta are more diversified than Cyprus, which has been relying heavily on the Double Tax Treaties that it has concluded with Ukraine and Russia. Only recently has it looked to further diversify its offering. The other countries mentioned have been looking at this for 10-15 years now, so Cyprus is some way behind.

Gold: Given the recent negative public-ity surrounding the tax bills of multi-nationals such as Google, Starbucks and Amazon, do you think that the current focus on clamping down on places such as Cyprus offering attractively low corporate tax rates is likely to continue?A.H.V.H.: I think that there is going to be greater coordination of tax policy internation-ally but it is an illusion to think that, one day, there will be a single tax system every-where. Multinational companies operating on a global scale will always need to think about how to structure their taxes. There are legitimate reasons for their planning – they want to avoid being taxed twice on the same income, for example. I believe that what has happened recently – better exchange of information – is good for transparency and the end of secrecy but it has to be said that Cyprus has never ranked high on the list of jurisdictions wishing to hide the identity of its clients. This is good for Cyprus and the Government should promote the idea that multinationals can establish certain head of-

fice functions here. The recent focus of the international media has been only on the

amount of tax paid without taking into consideration many other aspects of the structure of multinationals.They are not evading their tax obligations and the schemes that are being discussed are, in fact, agreements between tax administrations in the various jurisdictions in which the companies are active.

Gold: What are the Group’s plans for 2015 and how do you envisage

the coming year for TMF in Cyprus?A.H.V.H.: Regarding TMF Group as

a whole, we shall continue to extend our footprint. On January 1, we opened a new office in Athens. We have already established offices in five African countries and made an acquisition in South Africa and we shall be expanding into five more African countries. We are also looking at the Baltic states to see if we should open there. As for TMF Group Cyprus, we plan to visit our clients and our feeders abroad and explain to them that Cyprus is on the road to recovery. We feel that Cyprus legal entities and the Double Taxation Treaty network can still offer our clients a lot of benefits and it is with this message that we shall be approaching them. 2015 will be a year in which we shall invest in going to international tax firms and tax planners and explaining to them that Cyprus has re-established itself as a reliable partner. It’s a positive message and one that we firmly believe in.

COMPANY PROFILE

IN 4-5 YEARS, WE

WILL MANAGE TO ATTRACT INVESTMENT

MANAGERS TO CYPRUS

Gold: Your slogan “Global reach, local knowledge” suggests that, as you men-tioned earlier, you are offering a lot of services to companies that are involved in cross-border business. Is that the case?A.H.V.H.: Yes. If a multinational com-pany has the ambition to start commercial activities next month in the whole of Latin America or Asia or even in both regions, it can come to TMF Group to help facilitate that. We know what we are doing and we have a network and infrastructure that oth-ers don’t.

Banks should promptly proceed with writing-off default interest and surcharges on overdue loans

Greater Restructuring RequiredNon-performing loans remain a major problem for the economy

Dr. George Mountis is Managing Partner of Delfi Partners.

The Central Bank of Cyprus (CBC) started releasing data on the non-performing loans (NPLs) of commercial and cooperative banks in June 2013. NPLs as a percentage of total credit

facilities have continued to rise ever since. However, although they rose from 30.6% in June 2013 to almost 51% in November 2014 (latest available data), which corresponds to over €7 billion of additional non-performing debt, NPLs restructuring has been very slow; the percentage of restructured non-performing loans has not exceeded 12% during the aforementioned period (CBC, 2015).

More to the point, as of late November 2014, only around 11.1% of NPLs – equating to loans worth €3.1 billion – had been restructured. As far as credit facilities to legal entities (mainly corporations) are concerned, the construction industry displays the highest restructuring rate; by the end of November, 25.3% of the sector’s NPLs had been restructured. It should be noted that construction is responsible for the highest percentage of NPLs with 78.7% of the loans granted to corporations active in the industry not being serviced. NPLs to developers and contractors that have been restructured account for over €1.4 billion, representing more than 46% of the total NPLs restructured. High restructuring rates have also been recorded in the transport and health sectors, exceeding 30% in both cases. Restructured NPLs in the real estate and tourism (accommodation & food services) industries stand at 15.6% and 16.1% respectively.

As for credit facilities to private individuals, of which more than half (51.7%) are classified as non-performing, the average restructuring rate is 8.3% (9.9% for housing and 6.6% for consumer loans). Of some €4.3 billion worth of loans granted for the purchase or construction of owner-occupied immovable property that are not being serviced, only €378 milllion had been restructured by the end of November 2014.

“Loan restructuring” refers mainly to the extension of repayment periods, and/or a ‘temporary’ decrease the monthly instalment. In some cases, restructuring involves lower interest rates or waiving part of the capital and/or the interest due. Moreover, the complex procedures that need to be followed in order to proceed with loan restructuring are considered by many to be an obstacle to the effort and, for this reason, various stakeholders have already submitted

a request to the CBC asking for the simplification of the process. Finally, the approval of a bill for property divestment and an appropriate insolvency framework are also considered as critical for the acceleration of restructuring rates in 2015.

Banks could secure the collection of significant parts of loans that are currently not being serviced (and, therefore, increase their revenue and liquidity), by managing their NPLs more efficiently. A more effective management approach comprises the restructuring of loans that are classified as non-performing but are still considered viable. On the other hand, there are no obvious benefits to delaying the restructuring process; on the contrary, the danger of a new crisis in the Cypriot banking system caused by the accumulation of huge amounts of NPLs cannot be ignored. NPLs act as an obstacle to the recovery of the economy.

The ‘new’ Bank of Cyprus (and the other recapitalised local banks) can contribute to growth by granting low interest loans and proposing ‘smart’ NPL restructuring solutions. Cyprus’ level of NPLs is the highest in Europe. For the economy to return to and sustain growth, household and corporate debt needs to be significantly reduced.

Banks should promptly proceed with writing-off default interest and surcharges on overdue loans, including interest on capital that debtors will never be able to repay, mainly because of previous usurious charges imposed by the financial institutions. A few months ago, six years after its banks went bankrupt, Iceland proceeded with a haircut of household debt by subtracting value of (mainly) housing loans. It is estimated that this initiative will directly benefit around 85% of households and that the write-offs will near €25,000 per debtor. It is important to note that Icelandic households and corporations never reached the levels of lending of their Cypriot counterparts.

Finally, although deposit interest rates have been significantly de-escalated, existing and new lending rates remain at artificially high levels and have not been proportionally reduced. ‘Fuelling’ businesses with new but notably cheaper money is a necessary move to reboot the economy. The Government should search for a solution for the huge debt amassed by households and businesses and consider (under specific terms and conditions and having calculated its impact on the banks) a ‘private debt relief’ programme.

info:

OPINIONOPINION

By George

Mountis


THIS YEAR MARKS THE 10TH ANNIVERSARY OF FIDUCENTER (CYPRUS) LTD, ONE OF THE ISLAND’S LEADING FIDUCIARY FIRMS. GEORGE SAVVIDES, PARTNER, JOINED A YEAR AFTER IT WAS OFFICIALLY ESTABLISHED IN JANUARY 2005. HE SPOKE TO GOLD ABOUT HOW THE COMPANY AND THE INDUSTRY HAVE EVOLVED OVER THE PAST DECADE AND HOW THINGS WILL INEVITABLY CONTINUE TO CHANGE. By John Vickers Photograph by Jo Michaelides

CHANGINGwith the

TIMES


FIDUCIARY SERVICES


other hand – and this is where it is the com-plete opposite of Cyprus – the country’s public service is unbelievably efficient. When we were considering opening an office in Malta, I had meetings with representatives of public bod-ies, and I met with the MFSA, the equivalent of CySEC, which also handles the registry of companies. I was extremely impressed. Indeed, if it were possible to combine the public service of Malta with the private sector of Cyprus, you would have the perfect jurisdiction!”

Nothing is ever perfect, of course, but, as far as the fiduciary sector is concerned, Savvides is in no doubt about the fact that things have improved during the past decade and, in par-ticular, since the law governing Administrative Service Providers was enacted two years ago.

“Things are totally different today,” he said, remembering that “When I started out, the in-dustry was definitely lighter in terms of regula-tion and obligations. Thanks to the legislation, it is in better shape now.”

Unfortunately, in the eyes of many, the legislation was and remains seriously flawed, notably because it exempted lawyers and ac-countants offering administrative services from CySEC regulation, making their respective professional associations (the Cyprus Bar As-sociation and the Institute of Certified Public Accountants of Cyprus) responsible for regula-tion. So in what sensehave things improved?

“It is much better to have something in place than nothing, mainly for presentational/status purposes,” Savvides explained. “In terms of being effective, however, it will only be when we come down to one regime and one regulator for everyone. It’s not enough to have a single regulatory framework; it’s also impor-tant to have one independent body enforcing it.”

Savvides admitted that the law definitely did not bring the expected results in terms of kick-ing out the fiduciary sector ‘cowboys’ because, he said, the regulatory fragmentation has ena-bled some people to “hide” behind something else.“There have been quite a few cases – and we have reported some of them as an Associa-tion – of companies officially changing their ownership status so that they fall into the ac-countant or lawyer category in order to escape regulation. Not many individuals or firms were forced out of the industry and this is mainly due to the law’s shortcomings.”

Regulation is not the only area where administrative service providers have been divided. Even the proposal to set up a profes-

sional association was not viewed positively by everyone in the fiduciary sector at the time, Savvides recalled.

“It was welcomed by most firms that were not accountants or lawyers and those that belonged to international networks were in favour from the very beginning. Overall, how-ever, I would say that the perception of the As-sociation was mixed, mainly because there was a misconception about what we were trying to achieve. Some people thought that we were, in effect, complaining about being regulated by CySEC or that they would have to deal with a stricter regime. Others thought that we were just “the foreigners” trying to change the game, while others saw that we were asking for a single regulatory authority and were afraid that they would be negatively affected.”

In the end, the CFA was set up, Savvides be-came its first President and, since March 2013 he has been working hard to deal with the aftermath of the banking and financial crises that dealt the industry a serious blow.

“The situation affected Fiducenter in the same way as it affected most of the industry,” Savvides acknowledged, “mainly in terms of new work coming in, although I think that even today can be considered too early to judge the full impact. It probably didn’t make sense for existing clients to leave at once but every time they are renewing their contracts, many are doubtless questioning whether they really need to maintain a company in Cyprus.”

And there are deeper issues involved, he went on. “Much of the product that Cyprus has been offering for many years has always had an expiry date. For example, the island

WE NEED TO

REPLACE AND

RECOVER THE INCOME THAT IS

BEING LOST, AND THAT HAS BECOME MUCH

MORE DIFFICULT

George Savvides, Partner at Fidu-center (Cyprus), was one of the very first people to be involved with Gold, contributing an article to our

launch issue in April 2011 entitled Cyprus com-mercial companies and the need for ‘substance’. He later featured regularly on the magazine’s pages as one of those spearheading the project to set up the Cyprus Fiduciary Association, a venture that eventually became reality and saw him installed as its first President. Then came the lengthy fight to persuade the House of Representatives to approve a long-delayed law that would regulate companies offering fiduci-ary services (‘Administrative Service Providers’), which finally bore fruit at the end of 2012.

This year is a special one for Fiducenter (Cyprus), since it marks the 10th anniversary of its establishment. In his stylish seafront office in Limassol, Savvides set out his views on how the firm and the sector has developed since he joined the company in March 2006.

“WhenI joined Fiducenter, there were just a couple of people managing a few companies and, at first, most of the tasks were subcon-tracted to the company’s head office in Luxem-bourg,” he recalled. “We had to catch up on the compliance side, in particular, but the firm gradually started transferring more work to Cyprus and now, of course, everything is done from here.”

The partners in Luxembourg, faced with a choice between Malta and Cyprus, both of which had joined the EU in 2004, opted for Cyprus. “The Maltese tax regime was – and still is – considered too complicated by many in the profession,” explained Savvides. Despite this, a Malta branch was eventually set up and, ironically, that particular venture was started by the Cyprus office, following the events of March 2013.

“Unfortunately, in Cyprus we are penal-izing ourselves,” he said. “Our professionals provide the best service by far; they are very close to their clients – they understand their needs, they are well-educated and have a good approach to their work – at least the great majority of them. In Malta, dealing with the private sector can be a nightmare but, on the

was and still is popular as a holding company jurisdiction but once a holding company has satisfied its purpose, it will be closed down. Consequently we need to replace and recover the income that is being lost, and that has become much more difficult.”

Indeed, the whole of the professional services sector has been affected by a variety of issues, which are rapidly forcing fiduciary firms to re-think their strategy and what they have to offer.

“In general, legislation is now pushing us to take decisions that, for various reasons, we were previously not taking as a country,” Savvides said. “Over the past two years alone we have had to deal with FATCA in the US, de-offshorisation in Russia, information exchange, the BEPS project, AML changes coming out of the Memorandum of Un-derstanding and elsewhere and so on, which means that we are moving towards more transparent and substance-related work.”As evidenced by the title of his article in is-sue 1 of Gold, the subject of substance has long been at the core of Fiducenter’s work. “At Fiducenter we have always promoted substance,” he confirmed, “even though for many years the more simple structures would have meant easy money for us. In 2006-2008, substance (meaning, among other things, having offices, staff and other resourc-es in Cyprus) was a hard concept for certain clients to accept, especially knowing that they could simply go elsewhere and get whatever they wanted. I frequently heard new em-ployees in our company saying that we were losing business through our insistence on the type of clients we took on but I was adamant in telling them that, one day, our approach would be the norm, because we could see, as a Group, that it was the direction in which things needed to move.”And things have indeed taken such a turn, which in its simplest terms means that Cy-prus has to get used to the idea of having a smaller number of registered international companies, which, however, will do much more work so their contribution to the coun-try’s GDP is far greater.

Funds have been touted as one of the potential saviours of the island’s financial services sector. I asked the CFA President if he shared this view.

“Funds are certainly part of the overall-concept of servicing higher-value, more substantial structures but it remains to be seen whether we will achieve the desired results,” he said, adding that “Although we now have the legal framework in place and commendable efforts are being made, in my

view we are missing some important tools if we are to be seen as a serious competitor. We lack international banks and high-profile firms active in asset management and funds administration,which would attract seri-ous investors. The sector is very ‘tidy’ under CySEC but we need more to become a seri-ous competitor with Malta, Ireland and other jurisdictions.”

Fiducenter (Cyprus) has a very close re-lationship with its parent company in Lux-embourg, a country which, George Savvides believes, not only has much to teach Cyprus but has many practices that we should have adopted years ago.

“I remember writing in Gold about the filing of tax returns and the importance of not missing deadlines,” he explained. “We had to be rated ‘non-compliant’ by the OECD in order to truly understand its importance and now we are still trying to catch up in order to ask for a new review. Luxembourg was, inci-dentally, also rated as ‘non-compliant’ but the reasons had purely to do with transparency and professional secrecy laws, not with poor com-pliance with basic rules and regulations.“There they have extremely high standards of regula-tion,” he noted. “Cyprus needed to be black-listed in order to react.”

A 10th anniversary is always a good time to look back and reflect on what a company has achieved. What does the Fiducenter (Cyprus) Partner see 10 years on? Has the industry de-veloped in the way he anticipated in 2005?

“Yes” is the unhesitating reply. “At last we are getting a level playing field, in the sense that, because we had the professional philoso-phy from Luxembourg from the beginning, we have always had the mentality of controlled growth and we have always been very care-ful about which structures we took on. As I mentioned before, we often rejected potential

FIDUCIARY SERVICES

clients if they were not providing all the infor-mation needed and we have always had very strict policies in terms of managing companies to protect both ourselves and our clients. I hear a lot of people in the profession saying that they can’t cope with today’s new requirements, ob-ligations and liabilities but this has always been our way of doing business. It’s a question of mentality and now we can say to colleagues and peers, ‘This is what we have always done.’”

And has the company achieved the goals you set for it when it was launched?

“Definitely,” Savvides said. “For me, our greatest achievement lies in the fact that our clients are extremely satisfied with our service. We are highly regarded, and in the industry we are considered a quality service provider, which is really important. What matters for us is to be able to grow in a smooth and controlled way while maintaining our quality standards, and to afford opportunities to our employees to pro-gress. We place a lot of emphasis on that. Career development is a very important aspect of any job and we want to keep our people happy.”

Is the Fiducenter Head confident enough to be able to forecast what the industry and his firm will look like in the next ten years?

“In terms of what the industry will look like? Definitely not!” he said. “I don’t know if I can forecast 12 months ahead!” he added, only half-jokingly. “As an industry we want to contribute – to the extent that we are able – to ensuring that the public sector deals with all these changes. We can’t pretend that the ‘good old days’ are still with us. We are no longer registering the massive numbers of companies that we used to but, in any case, it’s better to have a much smaller number of companies that are fully active with a lot of business than ten times that number of companies that are doing nothing.”

“The profession is constantly changing and evolving so we, as a company, need to adapt continuously and we have always known this, which is why we have been diversifying our portfolio of services to include private equity services and wealth and estate planning and administration, for example. We have an asset management division in Luxembourg that can assist clients wishing to diversify their portfolio. So we are expanding the range of services we of-fer. This is the only way to survive in such a rap-idly changing sector. We can only do so much; external factors and international developments are beyond our control and, at the end of the day, we have to learn not only to adapt and live with them but to turn them in to opportunity. The best starting point in doing so is to realise that the good old days are gone and we all need to face the new reality.”

WE LACK INTERNATIONAL

BANKS AND HIGH-PROFILE

FIRMS ACTIVE IN CUSTODY AND ASSET

MANAGEMENT


BARBARA TUGE-ERECINSKA, AMBASSADOR OF POLAND, RECALLS HER INVOLVEMENT IN THE NOW-LEGENDARY SOLIDARNOSC TRADE UNION, THE SEVEN YEARS OF HARD TIMES THAT FOLLOWED THE “SOLIDARITY CARNIVAL”, AND HER SUCCESSFUL DIPLOMATIC AND POLITICAL CAREER. By John Vickers | Photo by Jo Michaelides

THE ETERNAL Optimist


PROFILE


On at least two occasions in her extremely eventful life, Barbara Tuge-Erecinska, who took up her post as Ambassador of Poland to Cyprus in July 2014, has had an

intense awareness that history was being made before her eyes. The first time was 26 years ago this month, when the communist government finally decided to hold round-table talks with the banned Solidarity trade union and other opposition groups in an attempt to defuse growing social unrest. Tuge-Erecinska had just graduated from university in 1980 when the strikes at the Lenin Shipyard in Gdansk started and, as a supporter of the newly established trade union, she approached the leaders and asked them if they needed someone who could speak English and some Nordic languages. She was immediately invited to the union’s headquarters where she became one of the three people who started the Solidarity International Department.

“It was an amazing time,” she recalls, de-scribing the 16 months that she and her col-leagues would later refer to as their ‘Solidarity Carnival’ and which ended with the imposition of martial law, people being killed or thrown into prison and many losing their jobs. “The unemployed included me and my then boy-friend (later my husband) but we had always felt that we were doing something meaningful and when, after seven years, the communist regime decided to start the round table discus-sions, I really had the feeling that I was taking part in a history-making process. People make history, of course, and often they don’t realise it at the time but I was able to observe it from the inside.”

Barbara Tuge-Erecinska’s second history-making moment came in 2004 when Poland, like Cyprus, became a member of the Euro-pean Union, more of which later.

When she thinks of Poland in the 1980s, what comes to mind?

“I have memories on two different levels,” she replies, thoughtfully. “On the one hand, I remember friendship and unity. I was young, very patriotic, and surrounded by people that I trusted. My husband was a journalist but the weekly he worked for was dissolved during the martial law period and he was not allowed to continue working as a journalist. I didn’t work either but we evidently didn’t need many material possessions. Even I find it hard now to understand how we coped but generation after generation of Poles have learned those kinds of survival techniques and most of our friends

were in the same situation. So I do have happy memories but, on the other hand, it was ex-tremely grey in Poland. There was nothing to buy even if you had money. We had monthly vouchers for practically everything we needed to survive on but to obtain them we had to prove that we were working or actively seeking employment. Many of my generation decided that there was no future for them and they left the country. After martial law was somewhat relaxed, the policy of the communist govern-ment was to push out the people whom they considered capable of causing problems. As the years passed, we began to feel more and more isolated.”

Today, after almost 25 years as a respected diplomat, the memories of those times are still etched in Barbara Tuge-Erecinska’s mind. “I remember going to an 10th anniversary reunion of my secondary school and everyone was talk-ing about jobs and I was the only one who was unemployed, even though I had been quite a bright student. I had the security police knock-ing on the door at 6.00am and searching my apartment, even the cot where my baby son was sleeping. This situation lasted ‘only’ – as I now say – seven years.”

And, in the end, change came. After Lech Walesa’s election victory in 1990, the country embarked on a very difficult programme of economic reforms and, at the age of 35, Bar-

bara was appointed Ambassador to Sweden. Today she is extremely proud of what Poland has managed to achieve in the last 25 years, es-pecially when she recalls that in 1989, inflation was 250%. A year after becoming Ambassador, she had a meeting with the Stockholm Cham-ber of Commerce. “I very proudly told them how, after less than 2 years of implementing the reforms, inflation was ‘only 74%’!” she says, laughing at the absurdity of the statement in the light of today’s situation.

From 2003-2013, the Polish economy grew by 49%. In 2003 FDI was around €50 billion. Ten years later it was €153 billion. Ironically, the Ambassador notes, “Those who paid the biggest price were those who brought the change about – the workers in those huge inefficient factories, shipyards, steelworks and coalmines which were the first places to be restructured. They were the millions demand-ing change and when it finally happened they were the first to become unemployed. This was extremely unfortunate but it could not have been prevented.”

As Ambassador to Sweden, Tuge-Erecinska was not only the youngest person in the em-bassy but the only woman. At the time, she says, she did not see herself as a role model for younger women or some kind of pioneer. “That came after Stockholm when I returned to Poland and was offered a permanent job at the Foreign Ministry. It was in Warsaw that I saw how many well educated and motivated women diplomats there were and I realized how much things had changed. By the time I was posted to Copenhagen, at least 50% of my colleagues at the embassy were women.”

Barbara Tuge-Erecinska was the first woman in Polish history to reach the rank of Under-secretary of State for Foreign Affairs, a post she held twice, both before and since Poland’s EU membership. Things were quite different before and after 2004. “Pre-EU member-ship,” she says, “my work was more to do with bilateral relationships with other countries, explaining Poland and its problems to the EU member states. I was in Copenhagen at the European Council in 2002 when the candidate countries finally concluded the accession ne-gotiations – it was another of those moments when I was aware that I was watching history in the making! Afterwards, I was occupied with coordinating all aspects of our EU mem-bership. Of course, bilateral relations remain important and it is in the national capitals that we diplomats have a chance to influence the instructions that the member states send to their representatives in Brussels. But it is a fact that more and more of what we are doing is a

IN 1992, I VERY

PROUDLY TOLD

THE STOCKHOLM CHAMBER OF COMMERCE

HOWINFLATION

WAS

only 74%!

result of the European agenda.”Before coming to Cyprus last year, Tuge-

Erecinska’s previous diplomatic post was that of Poland’s Ambassador to the UK. Did she spend a lot of her time trying to change Brit-ish perceptions of Polish workers who were frequently being accused in some quarters of “taking away” UK jobs?

“That wasn’t actually the case when I arrived in London,” she says with a smile. “From 2006 to 2008, I became used to being told how wonderful it was to have all those Poles in Brit-ain because they were such skilled builders and plumbers and that without them the economy wouldn’t be able to grow, and so on. I did hear words of concern from local communities where the numbers of Poles were proving to be something of a challenge for the social ser-vices – schools, doctors, etc. – but overall there was a very positive atmosphere. Things started to worsen when the financial crisis hit Britain and, I must say, I found quite a lot of hypoc-risy involved because politicians, the media and business people were telling me that it was not true that Poles were ‘stealing jobs’ and that they were needed in the British economy but the message for local consumption was com-pletely different.”

I suggest that Cyprus is a much quieter post-ing for the new ambassador and she agrees, confiding that it was something she had been hoping for.

“I wanted to be posted to an interesting place, and Cyprus is not only interesting from a political point of view, locally, but also a good place from which to observe what is go-ing on in the region. So I wanted a posting that was interesting but not as demanding as my previous ones over the past 20 years have been.” Not only is Cyprus less demanding; it is also less formal, as she discovered last summer. “It was the first time in more than 20 years that I had the courage to go without tights! My legs saw direct sunshine for the first time in so long and that was something I really appreciated!”

While preparing for her posting to Cyprus, the ambassador saw that the prognosis for the economy was very dark. But, she says, when she came here, the picture had changed. “I noticed that all those very dark predictions had not happened and that, fortunately, the country’s recovery was taking place much faster than anyone had expected. I have a great deal of sympathy for people here because, as I told you, Poland went through very difficult and painful reforms 25 years ago and even now they have not been completed – thousands of people are protesting against the likely closure

of some more coal mines as we speak – and I understand how reforms affect ordinary people who are not to blame in any way for what has happened in Cyprus. I also think that credit and respect are due to the people and the gov-ernment for the way in which they are dealing with the consequences of the crisis.”

The Government has said that foreign investment is key to reviving the Cyprus economy. Asked of there are specific sectors, which she believes that Polish investors may be interested in, Barbara Tuge-Erecinska replies that the Polish government is saying the same thing. “Poland would like to see capital going into the country rather than out of it! How-ever, there are companies that have shown an interest, especially in the energy and copper mining sectors, and we also have very good contacts with the shipping sector that could be beneficial to both sides.”

On the subject of Cyprus’ aspirations to become a regional energy hub, the Polish Am-bassador is hopeful that they will prove to be well-founded.

“I have my fingers crossed that Cyprus will find enough hydrocarbons to make a change for the country and not only for itself,” she says. “Poland, like many other EU countries, has for so long depended on the supply of gas from one direction and considers it extremely important to have different sources of supply so we would be very happy to see Cyprus’ aspirations and dreams become reality and we will be happy to share our own experience with Cyprus – we are completing an LNG terminal on the Baltic shore, for example, so that is an area of potential cooperation, where we can show how the whole project was prepared and delivered.”

Coming from a country which, 30 years ago, underwent a revolution that few people could have predicted, is Barbara an eternal optimist who believes that even the most seem-

PROFILE


ingly intractable problems can be resolved?“The short answer is yes!” she says, and she

finds herself in agreement with most of her fellow ambassadors on the issue of the impact that a settlement of the longstanding ‘Cyprus Problem’ could have on the economy, adding that she has “no doubt whatsoever” that a solution of the problem will benefit both the people and the economy. “There have been several reports that show that the economy would gain a lot but there is also the human factor which is extremely important. Time is not on anyone’s side but I am absolutely sure that it is possible to find agreement.”

While acknowledging that the Cyprus issue cannot be compared with Poland in 1989, she believes that there are lessons to be learned. “I can tell you that it was not easy for the opposition to sit down with the communist government – on the one side were people, some of whom had spent years in prison and had been sent there, beaten and humiliated by those across the table – but it was so important to look to the future and to agree that it was not the time for pride or who would be seen as the winner. I believe that no matter how difficult and complicated the history of Cyprus is, there is a way to move forward, without forgetting what happened – you can’t and you shouldn’t – having a good future as the ultimate goal.”

Finally, and in addition to the new experi-ence of enjoying sunshine, how would the Ambassador describe her experience of Cyprus so far?

“It’s been very positive,” she says without hesitation. “It’s mostly about people but it’s also about the beauty of nature. I love swim-ming so it’s wonderful to be in such a place. Cyprus has a great richness to its history and I am looking forward to visiting Paphos where our archaeological mission is turning 50 this year. I am very happy to be here.”

Credit and respect ARE DUE TO THE PEOPLE AND THE GOVERNMENT FOR THE WAY IN

WHICH THEY ARE DEALING WITH THE consequences OF THE CRISIS


COVER STORY

THE CYPRUSSHIPPINGDIRECTORY

THE ECONOMIC CONTRIBUTION OF MERCHANT

SHIPPING TO THE ECONOMY OF CYPRUS HAS ALWAYS BEEN

VERY SIGNIFICANT AND, FOLLOWING THE MOMENTOUS EVENTS OF MARCH 2013, IT IS

NOT AN EXAGGERATION TO SAY THAT IT CARRIED THE

ECONOMY UNTIL OTHER SECTORS COULD ONCE AGAIN

ACTIVELY CONTRIBUTE. CYPRUS IS THE BIGGEST

THIRD-PARTY SHIP MANAGEMENT JURISDICTION

IN THE EU, IT HAS THE 10TH LARGEST MERCHANT FLEET IN

THE WORLD AND THE THIRD LARGEST IN THE EUROPEAN

UNION WITH APPROXIMATELY 1,000 OCEAN-GOING VESSELS

OF A GROSS TONNAGE EXCEEDING 19 MILLION.

ON THE FOLLOWING PAGES, 17 SHIPPING-RELATED FIRMS

PRESENT THEIR SERVICESIN DETAIL.

46 ABB Turbocharging

48 Columbia Shipmanagement

50 Costas Indianos & Co

Advocates & Legal Consultants

52 CTC Automotive Ltd

54 Deloitte

56 DeltaSoft Ltd

58 EY Cyprus

60 FURUNO (Cyprus) Ltd

62 GCC Computers

64 Hellenic Bank

66 Horwath DSP Ltd

68 Intership Navigation Co. Ltd

70 Lowland International

Shipping Cyprus Ltd

72 Oesterreichischer Lloyd

Seereederei (Cyprus) Ltd

74 PwC Cyprus

76 Salamis Shipping Services Ltd

78 UiBS

SPECIAL PROMOTIONAL FEATURE

ABB TURBOCHARGING

A BB Turbocharging is a global leader in the manufacture and maintenance of turbochargers for 500 kW to 80+ MW diesel and gas

engines. Our leading-edge technology helps our customers to perform better and produce fewer emissions, even in the toughest terrains on ships, power stations, gen-sets, diesel locomotives and large off-highway vehicles.About 200,000 ABB turbochargers are in operation across the globe on ships, power stations, gen-sets, diesel locomotives and large, off-highway vehicles. We have over 100 Service Stations in over 50 countries worldwide.ABB Turbocharging prides itself on service excellence to ensure that customers make the most of their investment. The right service prevents repeat maintenance events and redundant spare part purchases, reduces downtimes, increases your application’s availability, and lengthens your application’s lifetime. That’s why we are dedicated to providing all of our customers with Origi-nal Service and Original Parts that offer all of the above. Below are the most important mile-stones in ABB Turbocharging’s remark-able history:1905: Alfred Buechi, Swiss engineer and inventor, patents turbocharging technol-ogy.1924: The world’s first turbocharger for a large diesel engine is delivered.1932: The first standardized range of turbochargers marks the beginning of broad industrialisation.


1952: A new era in ship propulsion begins when the “Dorthe Maersk”, the first ship pow-ered by a turbo-charged two-stroke diesel engine, sets sail.1960s: Smaller, lighter RR turbo-chargers for modern diesel engines set new standards in efficiency and pressure ratio.1980s: VTR 4A and VTC take turbo-charging to a new level of efficiency to become the standard choice.1988: Change of name when ASEA and BBC merge to form ABB.1998: The “Catalonia”, equipped with an engine running on ABB turbochargers, breaks the record for the fastest surface transatlantic crossing.1999: TPL-B is launched to meet world-wide demand for large ocean-going vessels.2004: ABB delivers TPL91-B for world’s most powerful electronically controlled engine.TPL-C and TPS-F are launched to tackle high output and low emission requirements.2008-2010: The A-100 are launched and make huge strides in emission reductions.2013: The A200-L achieves an unprec-edented increase of 30% volume flow for a extremely compact turbocharger.2014: The Power2, specially designed for 2-stage turbocharging, breaks single stage limitations.

THE FUTURE: ABB continues its tradition of innovation to provide sustainable technologies.

ORIGINAL SERVICE AND ORIGINAL PARTS We offer a full range of services 24/7, 365 days a year, at any one of our 100+ ABB Service Stations in 50+ countries across the globe. We own all of our Service Stations and we employ 600 qualified service engi-neers so that you get the support you need, when you need it, where you need it.Our Service Agreements are designed to help you minimize the risk of produc-tion interruptions as well as increase the efficiency and reliability of your systems.

MAINTENANCE MANAGEMENT AGREEMENT (MMA)Profit more by doing lessA Maintenance Management Agree-ment (MMA) is a service agreement for maintaining your ABB turbocharging solutions in your fleet. The Maintenance Management Agreement is part of ABB

CONTACT INFORMATION: ABB Turbocharging

Address: 1, Alexandrias St., Ind. Zone Ag. Sylla, 3rd Phase, CY-4180 Limassol | Tel.: (+357) 25343428 | Fax: (+357) 25343429 e-mail: [email protected] | Website: www.abb.com/turbocharging


Turbocharging’s well-structured offering of proactive service solutions for the cus-tomer’s turbocharger. The MMA specifi-cally targets end users of turbochargers on marine and stationary engines wanting close support of their turbocharger servic-ing activities rather than complete delega-tion. Under an MMA, ABB Turbocharg-ing takes responsibility for planning and organising service and spare parts logistics, relieving the customer of both the technical and administrative workload.This optimizes your maintenance manage-ment and reduces your workload. You are given an annual budget plan, advance ser-vice recommendations, discounts on new original spare parts, and a single contact person who will work with you in your language and in your own time.If you’re looking for a full-service sup-

port system that gives you a proactive role and full transparency, an MMA is right for you. 150 of our customers are already convinced. They have chosen to cover some 7,000 turbochargers under an ABB MMA, and that’s not just because you can save 20% on spare parts.

OPERATION PERFORMANCE PACK-AGE (OPAC)Meets your exact needs everywhere, every timeWith ABB’s Operation Performance Package (OPAC for short), you get a fully customizable, fully delegable OEM ser-vice package, paid according to the actual number of turbocharger running hours. Designed with and for our customers, the OPAC is a more flexible, cost-effective approach to turbocharger servicing that is made to meet your exact needs every-where, every time, with Original Parts and Original Service over an agreed period of time.Customers signing such an agreement see added value through easier cash manage-ment, reduced administrative costs and full access to ABB’s consolidated turbocharger and service know-how.ABB takes full responsibility for the customer’s turbochargers, including the risk of excessive wear and tear. Every OPAC agreement is developed individually, based

on a detailed analysis of the customer’s ap-plication and operating conditions. Custom-ers enjoy a safe and reliable turbocharger operation with no hidden costs, access to ABB’s know-how and technical expertise, the highest spare parts availability, trans-parent cost management and a worldwide service network.

CUSTOMER PART EXCHANGE PROGRAM (CPEX)Maximize availability through exchangeCPEX is part of ABB’s reconditioning pro-gram for TPS shafts and bearing casings as well as for VTR and TPL blades, bearings and pumps.CPEX offers ABB service customers a glob-ally standardized range of high-quality reconditioned parts. CPEX enables you to minimize engine downtime by offering the possibility of exchanging your ABB turbo-charger parts for original ABB reconditioned parts. You benefit from faster service, proven OEM quality and a global standard parts warranty. Contact local ABB Turbocharging Service Station to get the servicing that meets your exact needs. Investing in the best service for your turbocharger is one of the most effective ways to improve your per-formance while saving fuel and money.

CONTACT INFORMATION: Columbia Shipmanagement

Address: Columbia House, 21, Spyros Kyprianou Ave., 4042 Limassol Tel: (+357) 25843100 | Fax: (+357) 25310086 | e-mail: [email protected] | Website: www.columbia-shipmanagement.com

Columbia Shipmanagement

Columbia Shipmanagement was established in 1978, providing ship & crew management through tailor-made services that have added value, give

solutions and deliver highly competitive advantages for our clients. Ship Management Offices are located in Cyprus, Germany, Greece, Singapore and China, managing a fleet of approximately 380 vessels. In the highly competitive passenger vessel industry, Columbia Cruise Services has upheld a global presence since 1985, providing premium Cruise and Hotel Services by dedicated teams from Hamburg and Limassol, while the teams are further supported by all other Columbia Management offices. Additionally, the Ship Management offices are supported by 13 Columbia Shipmanagement -owned crewing agencies located in Europe, Eastern Europe and Asia. Columbia Shipmanagement focuses on building trustworthy and strong relationships with clients and providing quality, safe and cost effective services. These include techni-cal, crew and commercial management, new building supervision, consulting and cruise vessel services.

Our ServicesTECHNICAL MANAGEMENT Through its comprehensive shore-based

management network, Columbia Shipman-agement provides full technical support to its managed fleet. Our procurement specialists ensure econo-

mies of scale and volume-based contracting to ultimately delivery quality and competitive services to our Clients. Furthermore, we offer practical advice on

wider technical and engineering matters, in-cluding the research and application of latest technologies and industry regulations.


Crew Management & Training• Columbia Shipmanagement employs over 14,500 staff on land and sea across the world, operating first-hand our di-verse fleet of commercial and passenger vessels.• We understand the vital role of seafarers in safe and successful ship operations. Columbia Shipmanagement is committed to growing and developing a pool of highly qualified seafarers.• Each year, Columbia Shipmanagement invests significantly in the ongoing training of crew, optimizing their professionalism, competence and single-minded focus on safety and efficiency.

Commercial Services• Our operations team has considerable experience in the efficient, safe and profit-able management of all kinds of tonnage – working closely together with ship com-mands, charterers, brokers, port agents and bunker suppliers to ensure proficiency across the board.• We are acutely aware of all commercial considerations, within a highly competitive industry and meet these requirements head-on with a range of services offered in the best interests of our clients: - Chartering- Voyage Estimation - Post Fixture - Voyage Accounting - Payments - Agency - Bunkering

New Building Supervision Columbia Shipmanagement offers its cli-

ents a complete new building solution, from design, contract negotiation and planning, right through to supervision and delivery. Columbia Shipmanagement has supervised the building of a significant number of ves-sels of all types, in leading shipyards across the world.• Our Clients benefit from Columbia Shipmanagement’s excellent knowledge of technical, commercial and environmental considerations, as well as national and inter-national shipping standards.

COLUMBIA CRUISE SERVICESOut of our Hamburg and Limassol offices, Columbia Cruise Services offers compre-hensive cruise vessel management which includes the following:• Hotel Management• Technical Management• Crew Management• Operations ManagementAt Columbia Shipmanagement, our unique expertise, passion for our work and commit-ment to delivering quality of the highest level combine to ensure that clients of Columbia will always enjoy the finest ship management services and a trusted partner.

Andreas Hadjipetrou,Managing Director




Costas Indianos & CoADVOCATES & LEGAL CONSULTANTS

OUR FIRMCostas Indianos & Co Advocates & Legal Consultants was established in 1924. The firm has acquired over the years a local and international client base comprising ship owners and ship owning companies, businessmen, international corporations, commercial banks, municipalities, consulting firms, real estate investors, etc.Our law firm provides custom-made shipping services with A focus on quality, professionalism and time efficiency.

We maintain long-term business cooperation with a wide network of firms across the EU, Russia and further afield. Our law firm is a member of the International Tax Planning Association (ITPA) and the Legal 500.

SHIPPINGCyprus is a major ship management centre worldwide and its Shipping Registry ranks among the top 10 international fleets. The Merchant Shipping Tonnage Tax Legislation 44(I) 2010 provides full tax exemption to ship owners, charterers and ship managers.

Cyprus has adopted a maritime safety policy, which focuses on the effective control of ships and on improving the quality of the country’s merchant fleet.

Our Firm offers the following shipping services:

Cyprus Shipping Companies & Cyprus Flag Provisional, Permanent & Parallel

Registration Mortgage of Vessels & Refinancing Sale, Purchase, Reflagging & Deletion

of Vessels


Merchant Shipping Tonnage Tax Legislation 44(I) 2010 Vessel & Crew administration

WHY CYPRUS? A Sovereign Flag – An International Mari-time Centre Member of the European Union Democratic country with a free market

economy Strategic location at the crossroads of

three continents Modern and efficient legal services based

on English practice No exchange controls and freedom of

movement of foreign currency Double Tax Treaties with 50 countries No tax on profits from the operation

or management of a Cyprus- registered vessel or on dividends received from a ship owning company No capital gains tax on the sale or transfer

of a Cyprus-registered vessel or the shares of the ship owning company No estate duty on the inheritance of

shares in a ship owning company No income tax on the emoluments of

officers and crew No stamp duty on ship mortgage deeds

or other security documents Signatory to numerous international

maritime conventions Bilateral agreements with 29 countries,

through which Cyprus ships receive either national or favoured nation treatment in the ports of other countries Competitive ship registration costs and

annual tonnage taxes Full protection for financiers and

mortgages

Favourable tax regime for ship management Low set-up and operating costs for

companies Excellent telecommunications and easy

access by air and sea Highly qualified managerial, clerical and

technical staff available

Merchant Tonnage Shipping Tonnage Tax Legislation 44(I) 2010THE TONNAGE TAX The tonnage tax system for Cyprus merchant shipping was approved by the European Commission on 24th March 2010 (case N. 37/2010), as compatible with the requirements of the EU acquis communautaire, in accordance with the relevant guidelines on State Aid to Maritime Transport. The Merchant Shipping (Fees & Taxing Provisions) Law


CONTACT INFORMATION: Costas Indianos & Co Advocates & Legal Consultants

Address: Tel: (+357) 22675231 / 22665232 Fax: (+357) 22669678 | e-mail: [email protected] | Skype: anthony.indianos | Website: www.indianos.com.cy


was enacted in May 2010 and introduced a new tonnage tax system in Cyprus, applicable as from the fiscal year 2010.This simplified tonnage tax system was approved for the first time for an EU Member State with an open registry, and is thus available to the world shipping business community.

SCOPE OF THE TONNAGE TAXIt extends the favourable benefits applicable to owners of Cyprus flag vessels and ship managers to owners of foreign flag vessels and charterers. It also extends the tax benefits that previously only covered profits from the operation of vessels in shipping activities, to cover profits from the sale of vessels, interest earned on funds

used other than for investment purposes, and dividends paid directly or indirectly from shipping related profit. The new tonnage tax system contains most of the favorable features found in tonnage tax systems in other EU countries, and more. The regime, therefore, provides Cyprus with a competitive advantage and is expected to significantly contribute to the improvement of the already strong position of the country in the shipping world.

International Shipping ConventionsCyprus has ratified most relevant

international maritime conventions currently in force. Cyprus is a member of the Council of the International Maritime Organization and, as a member of the EU, it has modernized all its maritime legislation according to European standards and participates in the Community law-making process, as well as the Short Sea Shipping and Euromed initiatives. Cyprus today is on both the Paris and Tokyo MOU white lists. The Cyprus Ship Registry is governed by the Merchant Shipping Law of Registration of Ships, Sales & Mortgages 1963-2005, of Fees & Taxing Provisions 1992-2007 and of Masters & Seamen 196302002.


CTCAUTOMOTIVE LTD

C TC Automotive Ltd is the sole authorized dealer for Caterpillar in Cyprus, providing services in the sales, after sales, maintenance and parts handling for the whole Caterpillar range and Caterpillar Marine Power Systems,


committed to its supplier’s high standards of sales and after sales service. It is a member of Cyprus Trading Corporation Plc (CTC) a public company listed on the Cyprus Stock Exchange, regarded as the largest commercial organization in Cyprus and a Caterpillar dealer since 1927.

Through our structure and systems, we empower autonomous fully focused teams of skilled professionals who aim to offer the best possible service to our customers, backed by a 24-hour after sales support.

Caterpillar Marine Power Systems, with headquarters in Hamburg, Germany, brings together all the sales and service activities for Cat® and MaK branded marine products within Caterpillar Inc. providing premier marine power solutions

and customer service from a single source for the global ocean-going, commercial and pleasure craft markets.

The commercial marine engine business

CATERPILLAR RESEARCH AND DEVELOPMENT

PROVES ITS COMMITMENT TO

AFFIRMING ITS POSITION AS THE

GLOBAL LEADER IN THE MARINE POWER

MARKET

CONTACT INFORMATION: CTC Automotive Ltd

Address: Tel.: 22 740515 | Fax: 22 485220E-mail: [email protected] | Website: www.ctcgroup.com


is split into three geographic regions – Europe, Africa and the Middle East, the Americas and Asia-Pacific – managing all sales and product support activities. They have direct responsibility for achieving the important growth objectives for the Cat® and MaK brands and providing customers and dealers with complete marine solutions. Caterpillar’s global dealer network provides a key competitive edge – customers deal with people they know and trust. Cat® dealers strive to form a strong working relationship with their customers, offering comprehensive and competent advice from project support to repair work.

You can count on Cat® dealers to deliver on industry- leading support solutions that maintain reliability, minimize downtime, and maximize affordability, no matter where you are.

Pleasure Craft Engines, beneath the surface - the perfect combination of efficiency and excitement, dependability and exhilaration. Behind the scenes - an unmatched worldwide customer support network. A suite of products and services are available to you to make your yachting experience a pleasure. From propulsion engines, generator sets, vessel controls and displays, and engine and vessel monitoring to Extended Service Coverage, Preventive Maintenance Agreements, all designed to give you an outstanding customer experience.

Caterpillar offers an outstanding marine diesel power range and a complete, continuously evolving product line. The result is one source for total power solutions on board, providing electronic marine engines, gensets, and vessel controls. What’s more, Caterpillar research and development proves its commitment to affirming its position as the global leader in the marine power market.

Caterpillar Marine Power Systems has one simple objective: to surpass customer expectations by providing outstanding sales and service support in a professional and consistent manner. The Caterpillar global dealer network is comprised of 182 locally owned businesses, 1700+ dealer branch stores, and more than 100,000 employees.

The Cat® worldwide dealer organization has the local expertise, specialists, and extensive spare parts inventory you’ll need - no matter where your vessel travels.

Caterpillar Marine Power Systems coordinates and strives to improve all marine sales and service activities with one simple goal: to ensure customer satisfaction in a constant and consistent manner. It is a goal and a promise encapsulated in the succinct motto: “Excellence on Board.”

Caterpillar offers an outstanding marine diesel power range and a complete, continuously evolving product line


COVER STORY

T he ability to offer top quality professional services to the shipping industry, requires in depth knowledge, extensive experience and specialised skills in a

variety of functional and technical areas. Deloitte is uniquely positioned to serve the Shipping industry in Cyprus. We provide an optimal balance between local resources and international expertise of our global organisation, Deloitte Touche Tohmatsu Limited. Understanding the needs, expectations and business challenges of the shipping industry is paramount to ensuring that we provide high quality cost effective services to our clients.

Deloitte is one of the leading advisory professional services organisations for the shipping industry in Cyprus. Our clients, of which we are extremely proud, include some of the world’s largest international shipmanagement and shipping companies operating through Cyprus as well as leading shipping lines, cruises, ferries, ports and port authorities.

Our Services in Shipping We offer our clients a broad range of traditional audit, tax, consulting and financial advisory services. We also offer attestations for the operating effectiveness of systems, a critical certification required by ship managers to be furnished to their customers as evidence of the ship manager’s service organisation credibility. In addition our financial advisory can assist clients in the development of cash forecast models for their business plans which is something very critical for the shipping industry today.

To combat cybercrime and the increasing number of cyber attacks in the Shipping industry we have developed our Cyber Risk Services (CRS). We can help our clients to prevent reputation-damaging incidents and if needed to provide specialised services to support their position in cases such incidents do occur. Our CRS service offerings are designed to include Ethical Hacking, Digital Forensics, Cyber Incident Response, Information Security and Business Continuity Planning Consulting.

Why Choose Deloitte?There are a number of factors, which differentiate Deloitte from the competition.

We are one of the biggest contributors to the success of Cyprus in becoming a truly international and shipping centre.

Our unique difference is that we are the only professional services firm that has all the competencies, audit, tax, consulting, financial advisory integrated to understand the issues that our clients face and serve them best with their business needs.

Our top priority has always been to maintain and protect our core values of integrity, objectivity, independence and technical excellence. The client is always at the centre of everything we do, and every client regardless of its size and location, receives the best our firm has to offer.

The Future of Cyprus ShippingDespite the challenges faced by the Cyprus economy and particular problems caused in the banking system, the operational and taxation infrastructure are unaffected. The shipping industry has therefore a huge potential for further growth as a quality and competitive shipping center.

Cyprus continues to be without a doubt one of the most attractive shipping and shipmanagement centres in the world. Amongst other advantages, the tonnage tax system which has incorporated the favorable features found in the tonnage tax systems of other member states is the latest that has been approved by the European Commission. It covers therefore activities not qualifying under the tonnage tax systems of other Member States as yet and/or not covered entirely in any other system while at the same time provides shipping companies not only with a very competitive tax burden but also with certainty as to their future tax position.

Shipping in CyprusLeading the way


COVER STORY

Your trusted advisors in shipping

Helping you navigate throughturbulent times

Our services in shipping include:

© 2015 Deloitte Limited

For more information about Deloitte’s Services in Shipping you may contact:

For further information, visit our website at www.deloitte.com/cy

Christis M. ChristoforouChief Executive OfficerTelephone: +357 22360300E-mail:[email protected]

Costas GeorghadjisPartner - Head of Audit ServicesShipping Industry expert Telephone: +357 25868686E-mail: [email protected]

Antonis TaliotisPartner - Tax ServicesShipping Industry expert Telephone: +357 25868686E-mail: [email protected]

• Tax

• Consulting

• Human Capital Advisory Services

• Corporate Finance Advisory

• Enterprise Performance Management (EPM) Solutions

• Financial Modelling Services

• Valuation Services

• Audit & Accounting

• ISAE 3402 Attestations

Cyber Risk Services•

Panicos PapamichaelPartner, Head of Enterprise Risk ServicesShipping Industry expertTelephone: +357 22360300E-mail: [email protected]


COVER STORY


COVER STORY

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CONTACT INFORMATION: EY Cyprus

Address: Tel: (+357) 22209999 | Fax: (+357) 22209997 | e-mail: [email protected] | Website: ey.com/cy

EY CYPRUS

EY has been at the forefront of the Global Shipping Industry for many years now, both as auditor and advisor to a number of large

public and private shipping compa-nies. We recognize that the shipping industry has not remained unaffected by the economic crisis. However, we believe that in every crisis there are opportunities for innovation and entrepreneurship, opportunities for people and companies to rise above the challenges and excel. Navigating the same waters with you for years, we have developed a deep understanding of your challenges and complexities.Our approach is based on years of hands-on experience of catering to your needs and is designed to support you, not just for this moment in time but, rather, in the context of a cycli-cal industry. Our global network can serve our clients regardless of location by combining local knowledge with international experience.EY Cyprus has long-term and deep commitment to the shipping indus-try, with a strong track record of service. We are able to respond fast and accurately to our clients’ needs, irrespective of location, with tailored services from broad, experienced teams with deep industry knowledge. Together with EY Greece, we are a team of over 130 experienced profes-sionals dedicated solely to supporting our shipping clients. Recently, we have been commissioned to conduct a study on the future of shipping in Cy-prus and we look forward to sharing our insights and ideas for the develop-ment of the local shipping sector.


Our Shipping Service OfferingsASSURANCE SERVICES• Financial Statements Audit• Financial Accounting Advisory Services• Assistance during the IPO process• Fraud Investigation and Dispute Services• Climate Change and Sustainability Ser-

vices• Accounting Compliance Services

TAX ADVISORY & COMPLIANCE SERVICES• Business Tax Services• Transaction Tax• Indirect Tax• Human Capital• International Tax Services (ITS)• Tax advice in relation to planning of

investments in shipping through holding structures

• Tax advice related to the tonnage tax regime

TRANSACTION ADVISORY SERVICES• Valuations and Business Modelling• Restructuring• Transaction support• M&A Advisory• Project Finance

ADVISORY SERVICES• Performance improvement• Risk• Service Organization Controls Reporting

((e.g., ISAE 3402/SSAE 16, ISO 27001)• Information Security• Enterprise Intelligence & Data Analytics• IT Internal Audit• Financial Services Risk Management• Actuarial Services

GLOBAL COMPLIANCE AND REPORTING• Establishment and set up of legal entities• Corporate Secretarial Support Services• Administration Services• Accounting Services• Payroll Administration and personnel related

services• Tax and VAT services

Stavros Pantzaris, Partner, Assurance Leader

Navigating the waters

At EY, we are committed to building a better working -

ness, sustainable growth, the development of talent in all its forms, and greater collaboration. We want to build a better working world through our own actions and by engaging with like-minded organizations and

as an organisation.Running through our organisation is a strong sense of

who count on us to deliver quality and excellence in everything we do. We want to use our global reach and scale to convene the conversation about the chal-lenges facing economies and the capital markets.When business works better, the world works better.We are the most globally integrated professional

in 150 countries, organized into 28 regions and four areas.At EY, we have long thought that globalisation is one of

to transform our organisation so that we keep in step with the changing needs of our clients and our people.EY in Cyprus has its origins dating back to the 1930’s.

and Africa (EMEIA) Area and one of the 21 countries that comprise the Central and Southeast Europe (CSE) Region.


CHARTING A COURSE TOGETHERIn shipping, the business environment can change as quickly as the weather.

At EY, we understand that you need support not just today, but for the duration of your journey.

Combining local industry knowledge with our global network, we offer support and insight to organizations across the world.

Find out how we can help you reach your destination.

© 2015 Ernst &

Young Cyprus Limited. A

ll Rights Reserved.

FURUNO (CYPRUS) LTD

History FURUNO, an international Marine Electronics company, was established in Japan in 1938 on the simplest of philosophies: to identify unanticipated challenges within the maritime industry and deliver quality solutions to assist its clients to overcome those challenges. In 1948, FURUNO commercialized the world’s first practical Fish Finder and has since then continued to strive for innovative excellence and quality manufacturing for its entire product portfolio which includes Marine Ra-dars, Navigational GPS, Navigational Echo Sounder, the entire GMDSS Product Range, Automatic Identi-fication System (AIS), Voyage Data Recorder (VDR), Fleet Broadband & VSAT Communication Systems, Elec-tronic Chart Display and Information Systems (ECDIS) and other marine electronic devices.Today, FURUNO remains the global leader in the Marine Electronics mar-ket, which has been achieved through the integration of its knowledge, skills and know-how gathered through on-going research and business activities.FURUNO’s position in the maritime market is further enhanced by its abil-ity to adapt to the changing needs of its clients, whilst always staying true to its vision and goals.


Global PresenceFURUNO has managed to estab-lish a massive inter-national presence through its invest-ment in 17 sub-sidiaries and local partnerships world-wide. FURUNO is the only marine elec-tronics manufacturer with such an extensive investment in its own subsidiaries globally. These subsidiaries are accompanied by an impressive 83 national distributors, enabling FURUNO to have a true international pres-ence and ensuring that its customers enjoy quality service right where they need it.Through its loyalty and commitment to national distributors, FURUNO has also proven that its business relations go beyond the strict boundaries of commercial agree-ments. It is FURUNO’s philosophy to share knowledge with local partners so that they then become better equipped to serve the needs of their customers within that particu-lar maritime community. FURUNO recognizes that local personnel inevitably know the idiosyncrasies of their own market, which is why we follow this ap-proach of localising knowledge. In this way, FURUNO has managed to develop a very strong and competent worldwide network that can serve every customer anywhere in the world.

Setting Itself Apart From Global CompetitorsOriginating from the ethos of Japanese culture, FURUNO’s lead in terms of mar-ket share within the Marine Electronics market can be attributed to its three core management principles, which are deeply engrained in every aspect of its business. These are: Its commitment to serving its customers

well though its willingness to adapt to a changing market Ensuring that its management always

remains creative in all facets of business Recognising that employee happiness and

company growth are intrinsically linked. These principles have been shared with and passed on to local partners, thus creating a dynamic synergy.


CONTACT INFORMATION: FURUNO (Cyprus) Ltd

Address: Tel: (+357) 25734466Fax: (+357) 25734460 | Mob: (+357) 97855855 | e-mail: [email protected] | Website: www.furuno.com.cy


Why Cyprus?Cyprus is a very attractive jurisdiction in terms of its maritime legislation and ship registry. It is home to the 10th largest fleet globally and is the second-largest ship man-agement centre in the world. This is further enhanced by its favourable tax system, appli-cable not only to Cyprus flag ship owners but also to owners of other flag ships, ship man-agers and charterers. This makes the island a very strong competitive contender within the maritime sector. With the local presence of some of the world’s leading names in the shipping industry in Cyprus, FURUNO quickly realised the importance of the Cyp-riot maritime community, hence the opening of FURUNO Cyprus Ltd two years ago.

Market SectorsThe company’s primary market is Mer-chant Marine, to which it supplies a wide range of Deepsea navigational and communication products. This is fol-lowed by the leisure fishing sector and, to a lesser degree, the professional fish-ing sector and recreational boaters. In the Merchant Marine market, given that FURUNO is the leading manufac-turer of marine electronics internation-ally, the vast majority of vessels across the globe have FURUNO products in-stalled. This fact has consequently led to an increased demand for retrofit projects and service/spare parts supply, which is the main focus of the company’s busi-ness.For the leisure fishing sector it is an unquestionable fact that FURUNO has the best Fish Finder in the market, with unique features including Bottom Dis-crimination and Accufish that immedi-ately sets FURUNO apart as the market leader. FURUNO Cyprus’ target is to create a community here that amateur fisherman can rely on for support and sharing of experiences.

The Cyprus TeamThe FURUNO Cyprus team is composed of industry professionals who, through their passion for marine technologies, have become renowned not only for their expertise and know-how on FURUNO products but also for the skilled manner in which they are able to provide FU-RUNO certified services.These personnel are well-trained and certified to international standards and have the necessary practical experience to deliver top-quality support to FURUNO customers.

FURUNO Cyprus Going ForwardThe company’s vision is twofold. In Cy-prus, it aims to further enhance its estab-lishment as a strategic partner through mutually beneficial associations with Cyprus-based shipping companies. At the same time, taking into account Cy-prus’ strategic geographical location, the company has the capability to undertake any mandate handed to it by FURUNO ELECTRIC COMPANY (FEC HQ) relevant to service in this region.

Charalambos Moyseos, General Manager

GCCCOMPUTERS LTD

GCC Computers started its opera-tions in Cyprus in 1987, originally as the exclusive busi-ness partner for Cy-prus of the Digital

Equipment Corporation (Digital). Today, GCC is an established IT and Telecoms solutions provider, recognized for offering high quality and advanced technology products and services, within the Cypriot and Greek markets.

YEAR FOUNDED: 1987GCC BUSINESS UNITS:

Telecoms & Utilities Business Unit Public & Finance Business Unit SMB Business Unit Network & Security Business Unit GCC Global Services Business Unit

OFFICE HQ:Nicosia, CyprusNO OF EMPLOYEES:35CLIENTELE: Telecommunications providers in Cyprus and Greece, govern-ment and semi-government organisa-tions, financial-banking organisations and Small-Medium Enterprises.27 consecutive profitable years

GCC’s philosophy is simple and clear: customer satisfaction is our top priority. Whatever the requirements, we strive to meet them by providing the highest quality solutions and services at com-petitive prices.We aim to be seen by both our custom-ers and cuppliers as a quality-conscious company. We achieve customer satisfac-tion through a formal and active ap-proach to quality issues. We believe and invest in the quality of our people, our products and our services. GCC’s ISO 9001:2008 certification forms the basis of our formal Quality Management


System that ad-dresses all activities within our com-pany.We look upon our customers as busi-ness partners, with whom we wish to enjoy a long-term and mutually ben-eficial business rela-tionship.Our suppliers are well-known inter-national IT and Solutions Vendors, specialist Solution Providers and in-ternational System Integrators. Their long-established, sound reputation guarantees us a

reliable and continuous supply of future products and technology, enabling us to successfully implement our business expan-sion plans. We aim to establish durable relationships with our suppliers, based on the sound business foundations of ethics, honesty, professionalism, trust and respect for one another’s business objectives and interests.GCC’s business culture, skills and experience have been accumulated over the last 27 years, culminating in our main focus today on large turnkey business solutions in the following sectors:

Public SectorTelecommunications Service ProvidersUtilitiesPrivate sector Small and Medium Busi-

nesses (SMB)Semi-Government organizationsBanking & Financial Services

The company also provides specialized cross-industry solutions, as follows:

Networks – In cooperation with Juniper

1987 Year Founded

1990 Acquired by Digital Equipment Corpo-ration – Company transformation to DEC local branch.

1994 GCC buys back its DEC shares

1999 GCC acquires ISO: 9000

2009Fortinet Gold Partner

2009 ISO 2001:2008

2011Juniper Networks Elite Partner

2011HP Partner

Greece & Cyprus

2012 HP Service ONE Expert Accreditation

2013 GCC launches its

2014 HP Partner

Greece & Cyprus

2014 Best Fortinet Partner of the Region

Constantinos Constantinou, Director

Photograph by Jo Michaelides


CONTACT INFORMATION: GCC Computers Ltd.

Address: Tel: (+357) 22206222 | Fax: (+357) 22206223 | e-mail: [email protected] | Website: www.gcc.com.cy


Networks (Elite Partner) we build Networks that are Endlessly Adapt-able, Seamlessly Scalable and Power-fully Intelligent.

Network Security – Fortinet Gold and most reputable partner in the region we deliver end to end Secu-rity solutions to all our customers.

Network Management, Applica-tions Management and Middleware Solutions

Hardware Infrastructure Solutions

Vendors AccreditationsHP:

Gold Servers Specialist Gold Service One Enterprise

Specialist (GCC is the only com-pany in Cyprus with such accredi-tation)

Gold Storage Specialist

JUNIPER:Elite Operate Specialist Partner

(Highest Level of Accreditation). GCC is the only company in Cyprus and Greece with such ac-creditation

FORTINET:Gold Partner (Highest Level of

Accreditation)

The Values We BringEXPERIENCE GCC has over 24 years of experi-ence in account management and sales, delivery and support of com-plex IT solutions.

QUALITYEverything we do is governed by well-defined, ISO 9001:2008 certi-fied processes. Our aim is to ensure that our customers remain part of our user community, not only throughout the lifetime of the project or the product sold but for the next

purchasing cycle and beyond. GCC is proud to be acknowledged as the IT company with the highest quality of people, products and services in the country

LOCAL PRESENCE Our local resources, fully con-versant with all the solutions and technologies we provide, guarantee the existence of reliable support contact points, thereby increasing customer confidence and satisfac-tion.

GCC COMPUTERS (HELLAS) MEPEGCC Computers Hellas began its operations in Greece in March 2013 as a fully-owned subsidiary of GCC Computers Ltd.

Its strategic aim is to establish itself as a trustworthy and valuable partner within the Greek ICT mar-ket, promoting the philosophy and values that have been championed by GCC as a leading provider of inte-grated modern technology solutions sustained by quality, consistency, reliability and mutually beneficial business relationships with clients and suppliers.

GCC Computers (Hellas) will make the most of the skills, qualifica-tions and expertise attained by the mother company throughout the 27 years of its operations in Cy-prus, in order to promote Network and Network Security solutions and services to the SP and Enter-prise sectors of the Greek market

In less than two years and due to an astute and flexible strategy, GCC Hellas has already managed to provide services and products to all the key telecommunications providers such as Cyta Hellas, Wind, Fortinet, Vodafone and OTE to name a few, but also to important private clients such as the Hygeia Hospital.

HellenicBANK

Since ancient times, Cyprus has served the world from its strategic location at the crossroads of three continents. The Hellenic Bank Group, strategically positioned in Cyprus since its establishment

in 1976, has been steadily developing its local and international clientele, becoming the second largest commercial bank in Cyprus. Operating through a network of 60 branches, four International Business Centres and the first Shipping Business Centre in Cyprus, four Representative Offices in South Africa, Russia and Ukraine, the Group employs over 1,400 people, offering a full spectrum of banking and insurance products and services.

Focusing on upholding its core values, Hellenic Bank looks to the future with renewed energy and optimism. With an enhanced shareholder base and a renewed Board of Directors and Executive Management, Hellenic Bank is leading the way in the fast-recovering economy of Cyprus as a key agent of growth.

Leveraging on its excellent reputation, exemplary service and high levels of liquidity, over the coming years the Hellenic Bank Group aims to actively support the continuous growth and internationalisation of Cyprus and fulfil its strategic aim of increasing profitability and growing its customer base.

Hellenic BankInternational Business Division - Shipping Business CentreThe International Business Division of Hellenic Bank is considered a major pillar of the Group’s success. It was back in the ‘80s when the offshore


department of Hellenic Bank was first established in Limassol, with clients of the shipping industry at its core. At the time, nobody could really have predicted the significance of the role it would play in the future development and prosperity of the organisation. By 1990, the Bank had established the first International Business Centre (IBC) of its kind by integrating that offshore department within its operations. The rest is history.Today, Hellenic’s International Business Division is rightfully considered a major pillar of the Group’s success. The four IBCs (two in Nicosia, one in Limassol and one in Larnaca), along with the Shipping Business Centre in Limassol and Representative Offices in Moscow, Saint Petersburg, Kiev and Johannesburg, all staffed by highly experienced professionals, spearhead the Group’s commitment to this lucrative and highly successful line of business.

Cyprus as a shipping centreThroughout the years, Cyprus has gained international recognition as a reputable shipping centre. With close to 1,000 ships registered under the Cyprus flag, the country maintains the third largest merchant fleet in Europe and the tenth largest in the world. More than 130 shipping-related companies operate out of Cyprus, controlling a fleet of 2,300 ships worldwide. The significant benefits of the new Shipping Tonnage Tax System (revised and approved by the European Union in 2010) are expected to further boost the country as one of the leading shipping centres in the world. In summary, some of Cyprus’ key benefits in shipping are:

The country’s strategic position at the crossroads of Europe, the Middle East and Africa. The flexibility that the “Open Registry”

provides to non-Cypriot citizens to register ships under the Cyprus flag. No income tax, capital gains tax and estate

duty for ships registered under the Cyprus flag. Advanced maritime infrastructure and

services. Low registration fees for ships. No stamp duty on documents or mortgage

deeds. Anonymity of beneficial owners through

trustee shareholders and nominees.

The Shipping Business CentreThe shipping sector had been successfully served by Hellenic Bank years before the

Strategically positioned to serve you!


CONTACT INFORMATION: Hellenic Bank Public Co Ltd

Address: Tel: (+357) 22500500 / 8000 9999 (from Cyprus) | Fax: (+357) 22500083 e-mail: [email protected] | Website: www.hellenicbank.com

International Business DivisionAddress: 131, Archbishop Makarios III Ave. & Ioanni Polemi Ave., 5th Floor, 3021 Limassol | Tel: (+357) 25502411 | Fax: (+357) 25502484

e-mail: [email protected]

Shipping Business CentreTel: (+357) 25502700

Fax: (+357) 25345430 | e-mail: [email protected]


inception of the International Business Centre. Since then, a sizeable portfolio of reputable customers from the shipping industry has been developed.This customer portfolio consists of some of the best-known companies in the business, with activities ranging from ship owning and ship management to chartering, bunkering, marine insurance and others.Dedicated to exclusively serving the shipping business community of the island and capitalising on the Bank’s longstanding affiliation with the shipping industry sector, the Hellenic Bank Shipping Business Centre, established in 2013, was the first of its kind in Cyprus. All the know-how and expertise accumulated throughout the years is now available under a single roof. Through a mixture of core and customised services, combined with a highly experienced

team of professionals, the Hellenic Bank Shipping Business Centre can now provide a new level of experience to this select group of clients.As a member of the Cyprus Shipping Chamber, the Shipping Business Centre is also a keen supporter of the focal purpose of the organization, which is the promotion of the interests of Cyprus Shipping and the advancement of the reputation of the Cyprus flag.

The Hellenic Bank Shipping Business Center, located in Limassol, serves shipping, ship management and other related shipping services companies with a wide range of banking services including: Current accounts and multicurrency

accounts in all freely convertible currencies.

International and local payments using advanced electronic payment systems for handling payments to suppliers, insurance companies, utility payments, standing orders, local staff salary payments, as well as salary payments to crew members. Cash Management services, working

capital management, short-term fixed and overnight deposits. Spot and forward foreign exchange

transactions, hedging positions in currencies and interest rates. Corporate and personal Debit & Credit

Cards. Finance to shipping companies for working

capital, credit facilities against blocked funds, shipping finance through syndicated loans with international banks and others. Trade finance and letter of guarantees

services. Escrow services.

Dedicated to exclusively serving the Shipping

Business Community!

CONTACT INFORMATION: Horwath DSP Limited

Address: Tel: (+357) 25255550 | Fax: (+357) 25255551 | e-mail: [email protected] | Website: www.crowehorwath.com.cy

Horwath DSP LimitedMember Crowe Horwath International

H orwath DSP Ltd is a mem-ber of Crowe Horwath International, one of the top 10 global accounting

networks. The Crowe Horwath network consists of more than 150 independent accounting and advisory services firms in over 100 countries around the world. Established in 1987, Horwath DSP Ltd is an accountancy firm with offices in Nicosia and Limassol, offering audit, tax, risk and advisory solutions to a diverse clientele in the local market and abroad.

The Team With 5 partners, 80 professionals and over 2,500 clients, Horwath DSP is one of the leading accountancy firms in Cyprus with offices in Nicosia and Limassol. The firm employs some of the most highly-trained, educated and experienced individu-als in the Cyprus market who are able to provide the highest level of client service. All key members of the team are either qualified ACA or ACCA who fully appreciate the need for adding value to the service offered to clients as well as the importance of deliv-ering on time.

The Shipping Industry in CyprusShipping is one of the largest industries in Cyprus, contributing approximately 7% of the island’s GDP. Due to its beneficial tonnage tax system (TTS), which is the best fully approved TTS in the European Union, Cyprus has become amongst the first ship management centres and has the third larg-est fleet in the EU.


The financial tur-bulence of recent years, along with significant fluc-tuations in charter rates, has driven shipping finance to more sophis-ticated structures and sources of finance and away from traditional bank financing, though the latter still plays a major role in driving the shipping industry. Other financing arrangements such as mezzanine struc-tures and shipping funds are becoming increasingly com-mon. Cyprus’ TTS and its extensive Double Tax Treaty network can be used in structures to deliver maximum tax efficiency.Troubled ship owning and ship management companies considering financial and corpo-rate restructurings can benefit extensively by including Cyprus companies and/or register-ing vessels under the Cyprus flag.We have recently been involved in major and innovative refinancing projects of shipping groups and, therefore, have all the necessary up-to-date knowledge and the experience to advise and assist clients with their financial restructurings.

Shipping ServicesWith a dedicated team of professionals, Hor-wath DSP Limited provides a comprehensive range of services to the shipping industry. As

a member of Crowe Horwath International, Horwath DSP is connected to offices in the world’s major shipping centres such as Hamburg and Singapore, and can therefore assist clients worldwide. The range of services offered by Horwath DSP to the shipping industry is summarised below: Advice on the Cyprus Tonnage Tax System Compliance with the requirements of the

Cyprus Department of Merchant Shipping Compliance and advice on Cyprus shipping

VAT issues Advice on mergers and acquisitions Advice on structuring of shipping groups Administration, accounting and audit Setting up and administration of Cyprus

and other jurisdiction shipping companies Assistance with registration of vessels under

the Cyprus flag or another jurisdiction’s flag Assistance with obtaining a licence as a Cy-

prus Private Ship Security Company

Emilios Ayiomamitis, Director



Intership NAVIGATION CO. LTD.

Since its founding in 1988, Cyprus-based Intership Navigation has grown from a small operation set up by the Hartmann Group of Germany into a major international ship

owner and manager, enjoying a ‘blue-chip’ reputation in its own right. The company currently has 81 ships under ownership or full management, the majority belonging to the Hartmann Group. Of these, 14 are tankers and the rest dry, mostly bulk carriers rang-ing from 5,700dwt all the way up to 180,000dwt Capesizes, plus around 20 general cargo vessels. In addition, Inter-ship partly manages an additional fleet of 104 ships on a crew management basis.

The company also stands at the forefront of technical and commercial innovation, having ordered a significant number of newbuilds in recent years. These include prototypes for several series of ships that have proved highly popular both with charterers and other owners who have since ordered the same. As well as designing its own ships, Intership has been able to partner lead-ing suppliers and technical bodies in introducing new equipment and systems that improve efficiency and reduce envi-


ronmental impact. One such innova-tive project will see the conversion of two pneumatic cement carriers to LNG propulsion.

Intership has always strived to maintain close relations with its clients, charterers and industrial partners. Not only meeting customers’ expectations, but consistently exceeding them has been the target.

Today Intership enjoys long-term rela-tions with its partners, which have grown beyond the transport of cargo from A to B. Intership today offers tailor-made solu-tions, such as stockpile/inventory manage-ment and other logistical tasks. In some cases, relations have grown beyond shipping, to the extent that Intership today manages a power plant in Jamaica for one of its ship-ping customers. Intership also continues to develop new buildings, always in close liai-son with its industrial partners, so that new ships meet the customers’ needs.

Intership co-ordinates its global opera-tions with a network of technical support offices in Houston, New Orleans, Montreal and Brisbane as well as commercial and manning offices in Germany, Poland and the Philippines.

A key characteristic of Intership is the importance it places on the training and welfare of seafarers. In 1994, Intership Navigation established its own training centre in Manila, Philippines and, in the same year, saw the first batch of company cadets graduating after their shipboard fa-miliarisation training.

Intership Navigation Training School, (ISNTC) has been certified by Germanis-cher Lloyd for compliance with ISO 9001. ISNTC conducts courses in compliance with the IMO requirements, particularly the codes of STCW, ISM and MLC. The training school is recognized by the Philip-pine authorities as a professional training institution and has obtained several Flag-state approvals for their courses.

ISNTC operates sophisticated bridge and engine simulators and maintains an exten-sive range of deck and engine equipment for hands-on training, which includes a full scale mooring station and the only real

Still Setting the Right Course

Dieter Rohdenburg



CONTACT INFORMATION: Intership Navigation Co. Ltd.

Address: Tel: (+357) 25584000 | Fax: (+357) 25585756 | e-mail: [email protected] | Website: www.intership-cyprus.com


ship’s crane available in the Philippines. Soon, a fully operational engine room will allow real-time training for engineers and engine ratings.

Having moved offices several times over the years to accommodate an ever- growing number of personnel, Intership settled into new purpose-built offices in 2013.

The new Hartmann House, in Limassol, Cyprus comprises 5,700m2 of open-plan office space which is fully automated and equipped with the latest technology, pro-viding an ideal base for the next chapter in Intership’s unfolding success story.

The new offices boast a large cafeteria (serving subsidized lunch), as well as a lounge area with TVs, a well-equipped gym and a ‘games room’ to promote physical and mental well-being. Recently a Day Care Centre was constructed adjacent to the building exclusively for employees’ children. It comes as no surprised that In-tership maintains a remarkably high staff retention rate of 96%.

For Intership, human capital is consid-ered as its main asset. Intership Navigation was the first shipping company on the is-land to be certified for compliance with the “Investors in People” shore staff develop-ment program. This program is now well implemented in the company – offering a flexible work-hour scheme, on-the-job coaching for new employees, training for existing employees, as well as career plan-ning tools.

Indeed, the company’s contribution to the national economy was recognised when it was presented with a CIPA (Cyprus In-vestment Promotion Agency) International Investment Award at a special ceremony held at the Presidential Palace in early Sep-tember 2013.

With all this in its favour, CEO Dieter Rohdenburg justly believes the company is well positioned to face the challenges of the future.

Lowland INTERNATIONAL SHIPPING CYPRUS LTD

Lowland International Shipping Cyprus Ltd. is a shipping company established in Larnaca, Cyprus and operating since the year 2009. The company is part

of the Lowland International Group, which was founded in 1993 with offices across 20 countries and Headquarters in the Netherlands. We provide ser-vices for parties in the shipping and offshore industry involved in third-party technical ship management and ship operation, maintaining a large pool of seafarers. We work according to the strictest standards, rules and procedures in order to always be able to provide our clients with superior services. Evidence of this is our recent accreditation from Lloyds of the MLC 2006 certificate. Lowland International Shipping Cyprus is a full member of the Cyprus Shipping Chamber. Our services and, therefore, Lowland International Group services, cover the following:

MARITIMEOur core business activity is to provide integrated crew management services to ship owners worldwide. We sail any type of ship and outfit them with complete crews of dedicated and qualified people whom we employ ourselves. Our track record in 2013 was shipping 82 vessels in management worldwide. We manage vessels like tankers (oil, gas and bitumen), heavy lift, supply vessels, tug


vessels, offshore diving support vessels and many more. The fact that we have our own manning offices worldwide can only be seen as positive to meet our clients’ high demands and requirements.

OFFSHORE OIL AND GASFor 23 years Lowland International has specialized in providing maritime crews for the offshore oil and gas sector. We are active in the drilling and production installations, as well as in all types of offshore support vessels (including diving vessels) and inland barges. We provide services to large multinationals as well as to national oil and gas companies, independents and small operators. Our operations span the globe. With the latest developments in the energy sector, we have established a new company ‘Lowland Cyprus Offshore’ (www.lowlandcyprusoffshore.com) with Mr. James Pretty (Offshore Manager) in charge, to better provide such services to the Eastern Mediterranean region. Lowland Cyprus Offshore is a member of the Cyprus Oil & Gas Association (COGAS).

MEDICALOne of our historical core activities, Lowland Medical Services, specializes in medical care and Health, Safety and Environment (HSE) Services. Lowland Medical Services provides medical facilities together with highly trained and very experienced doctors and medics for remote


CONTACT INFORMATION: Lowland International Shipping Cyprus Ltd

Address: 5A, 28th October St., 7560 Pervolia, Larnaca | Tel: (+357) 24427342 | Fax: (+357) 24427343Contact: Pavlos Michaelides | e-mail: [email protected] | Website: www.lowland.com


locations. The position of medic is often combined with that of safety coordinator. Our medics are specially trained to fill this role and, for this reason, can also act as HSE advisors. If legally required or specifically requested by our clients, we make experienced doctors available to support our medics on a 24/7 basis.

RECRUITMENT & SELECTIONIn those situations where a client prefers to provide permanent employment to the person or persons that will fill a specific vacancy on board a vessel or offshore installation, Lowland is your preferred partner for the recruitment and selection

Health, Safety, Environment & Quality (HSEQ)Lowland International is a shipping company and approved marine & offshore crew management contractor. We plan and deliver integrated services in harsh and challenging environments for the maritime industry and the offshore oil and gas industry worldwide.We are committed to a policy of achieving HSE and Quality excellence in all of our business activities and operations. Through our quality and safety management systems, we have established a framework for setting and reviewing HSE and Quality objectives for our company: Our HSE and Quality philosophy is based on the international standards of OHSAS 18001 for occupational health and safety, ISO 9001 for quality assurance, and STC/VCA for safety. It is worth mentioning that in 2014 we encountered ZERO Lost Time incidents.

process required to identify the best candidate(s).Lowland has a long track record of identifying and selecting the best talent for a given maritime or offshore function.

TRAINING & EDUCATIONWe believe that an essential part of our services is to ensure that our personnel have the means and opportunity advance professionally through training and career management.By gaining experience in different companies, on different vessels or rigs and in different positions, we enable our staff to accelerate their careers. We arrange participation in training and educational programs, both at our in-house facilities as well as externally. We perform regular professional performance assessments and discuss the results with our employees to help them reach their goals.We support ocean shipping schools in Ukraine, Russia, Romania and Philippines and have initiated career projects in various other countries. NEN 4400-1

OELSR

Oesterreichischer Lloyd Seereederei (Cyprus) Ltd (OELSR) was origi-nally founded in the Mediterranean

and has a history dating as far back as 1836.

The family-owned shipping company is a full member of the Cyprus Ship-ping Chamber (CSC) for almost two decades now and its Chairman, CEO & Partner, Capt. E. Koch, also holds the position of Vice Chairman of the Cy-prus Shipowners Employers Association (CYSEA). Several key members of the OELSR team and the Chairman actively participate in and contribute to the vari-ous CSC sub-committees, confirming the Company’s strong bond, collabora-tion and remarkable relationship with the CSC. In addition, OELSR fully supports and encourages the Maritime Institute of Eastern Mediterranean and The Nautical Institute as well as other maritime associations, thereby enhanc-ing the growth of the Maritime Cluster in Cyprus.

Österreichischer Lloyd Seereederei (Cyprus) Ltd’s slogan, “Steaming Ahead”, brings to mind the confidence and determination with which we at OELSR have developed our operations over the course of our rich 178-year


history. After the firm’s entire reloca-tion to Cyprus in 2001, we became a key component of Cyprus’ attractive maritime sector, both facilitating and advocating for its development.

OELSR owns and manages its small – though very strong and sturdy – young fleet of seven vessels (6.5 yrs), all proudly flying the reputable Cy-prus flag from its premises close to the port of Limassol and subsequently subject to the favourable Cyprus Tonnage Tax System (“TTS”).

As a fully fledged ship owner and in-house ship manager, we are confident in and comforted by our teams, consisting of former Captains and other qualified industry professionals from multicultural societies in providing crewing, purchasing, technical, insurance, accounting, admin-istration, newbuilding supervision, travel repair group services, etc., thereby econom-ically safeguarding our fleet and further strictly adhering strictly to IMO and ISM regulations on all safety, quality and envi-ronmental aspects of our operations.

Collectively, our onboard and shore-based teams are motivated to excel in terms of performance and execution, with exclu-

sive onboard complements through MED CREW Ltd, and the Company has adopted the philosophy of protecting and preserv-ing the greatest possible staff continuity by means of competence, training and selec-tion both onboard and ashore

With such an accumulation of diverse knowledge and experience with all types of seagoing transport, the company is in a po-sition to offer extensive management skills, not only to its own vessels but also to other ship owners sharing our philosophy.

We can at present accommodate an ad-ditional 5-8 vessels at any time without increasing the present workforce and are, in fact, considering to take additional vessels under in-house management.

OELSR’s drive for excellence, service, communication and availability is imple-mented from the Chairman & Partner downwards, always aiming at excelling in the quality of our services to our Custom-ers and Investors alike.

Capt. Eberhard Coch, Chairman, CEO and Managing Partner


CONTACT INFORMATION: Oesterreichischer Lloyd Seereederei (Cyprus) Ltd (OELSR)

Address: Tel: (+357) 25662555 | Fax: (+357)25662666e-mail: [email protected] | Website: www.oelsm.com


We are thrilled to cooperate on a global basis with qualified, professional and pro-active 1st Class National and International Associates, Institutions and Contacts.

“Cyprus - where great opportunity pre-sents itself for taking positive steps forward in the number one Shipping Centre in Europe”As a quality, caring ship owner navigating world markets, top management emphasis-es “quality” services throughout, including but not limited to:-

CommercialThe majority of the vessels are members of highly respected pool, operated under Time-charters, or straight Time Charter with first class European Operators. Long standing and healthy global relationships.

Crewing Exclusive employment via MED CREW Ltd where all seafarers undergo extensive orientation training above and beyond STCW requirements as well as continuous onboard training. Long-term and moti-vated repeat onboard teams. Exclusive total Crew Management for ÖL with a pool of 150- 200 loyal seafarers.

Technical & Purchasing In-house technical repair flying squad. Regular maintenance and strict monitor-ing and control of maintenance periods. Favourable terms and conditions for all supplies, including critical machinery and equipment, spare parts, insurances and total fleet agreements. Uninterrupted total management of services with low repair costs. Global Master Purchasing Agree-

ments. The company prides itself on its ability to manage its vessels efficiently – management’s hands-on approach keeps costs down without sacrificing the quality or standards of its operations. Addition-ally, the Company’s drydock costs are typically lower than the industry average

AdministrativeShips flag and class compliance and audit certification – Documents of Compliance onboard and ashore. Contract Manage-ment and Legal, Equity Acquisition.An extract from recent communication with Flag State:

“Both you and your company are considered by our Administration as an example of Ship Manager which sets the Level of excel-lence for the rest of the shipping industry.”

Financial Stringent finance and cost control man-agement, accounts and budgeting. In each of the past six years, almost every vessel has outperformed the Moore Stephens Operating Cost benchmark.

GeneralCultivation and continuous development in healthy and happy working environ-ments:

A “CAN DO!” ATTITUDE IS WHAT IT

TAKES TO ACHIEVE THE...

RIGHT STRUCTURE + RIGHT FOCUS = RIGHT RESULT

CONTACT INFORMATION: PwC Cyprus

Address: Tel: (+357) 22555000 | Fax: (+357) 22555001e-mail: [email protected] | Website: www.pwc.com.cy

PwC CYPRUS

C yprus plays a prominent role as a leading shipping and ship management centre and aims to strengthen further its posi-tion in the world economy by

maintaining and enhancing further its sound maritime infrastructure, favourable tax regime and competitive ship registration and annual tonnage tax rates.

Why Cyprus?Cyprus offers a unique experience to investors and trading partners. The strong pro-business attitude, the multi-lingual and highly skilled human capital, the state-of-the-art telecommu-nications infrastructure and the favourable tax system have made the island one of the most progressive and efficient business locations in Europe.The Cyprus Shipping Registry is one of the largest in the EU as it is estimated to constitute 25% of the whole EU “fleet” and the 10th largest worldwide. Moreover, Cyprus is the biggest third party ship management centre in the EU and the Cyprus flag is on the white list of Paris MoU.Cyprus has the most modern, competitive, flexible, fully approved Tonnage Tax system in the EU, combined with an excellent infrastruc-ture and an extremely competitive tax system with the lowest corporate tax rate in the EU. Stable environment, consistent government

policy, supportive tax office Tonnage Tax (TT) system provides for TT

on net tonnage of the vessels and full exemp-tion from corporate income tax (CIT) on actual profits Totally exempt companies are regulated

completely by the Department of Merchant Shipping rather than the Tax Authorities Applies to owners, charterers and ship man-

agers of mixed fleets (EU/EEA and non-EU/EEA) Grants total tax exemption of profits tax and

capital gains and distribution tax at all levels Allows mixed activities (shipping subject to

TT and other subject to CIT) within a com-pany/group Supports an open registry


Allows split ship management activities (crewing or technical) Non-TT qualifying income is only taxed at

12.5% CIT with other benefits The tax incentives combined with the econom-ic and the other advantages provided, including the excellent infrastructure, make Cyprus the ideal choice for ship owners, charterers and ship managers.

PwC’s Shipping & Ports teamPwC’s Shipping & Ports team has grown over the years in step with the industry, supporting our clients through the turbulence of supply and demand imbalances and financial crises, as well as industry restructurings, regulatory transformations, technological advances and changes in financial reporting and corporate governance requirements. Our experience and network of dedicated shipping industry prac-titioners enables us to provide our clients with quality professional services uniquely tailored to the needs of a leading shipping and port or-ganisations, whether family-owned or publicly listed, large or small. We have developed our Shipping and Ports expertise through working with leading shipping and port companies in the world. We have a longstanding and proven track record in auditing and consulting within the contexts of international shipping, ports, logistics and supply chain management.In a demanding and challenging business environment, our diverse teams of experts are sharing deep knowledge and experience. Our teams support you to create the value you are looking for by providing specialised solutions based on quality. Together we build relation-ships based on trust and we say things as they are, to assist you to deal with issues that tomor-row will prove important. We provide services for shipping companies, terminal operators and other shipping-related businesses in the areas of: audit and assurance, consulting, trans-actions and global tax. At PwC Cyprus we have a dedicated team consisting of over 50 professionals with a deep knowledge of the shipping & ports industry

who bring a continually fresh perspective to your organisation, helping you manage the risks and challenges in your business and maxi-mise the returns.

How we can help?We deliver customised services from our in-dustry specialists in the following areas: Tax planning, structuring and restructuring

(legal, finance and operational) Audit and assurance Listings/IPOs Consulting to achieve cost efficiencies and

business process re-engineering Deals support (corporate finance, valuations,

mergers & acquisitions) Registration of shipping companies (ship

owning, chartering or ship management) Registration of holding and/or finance com-

panies Ship registrations, deletions, transfers and

mortgages Maintenance and full compliance services of

Cyprus registered companies Operations and quality management for

obtaining ISO 9000 certification Human resource advisory including full re-

patriation service for expatriates Payroll services and accounting outsourcing Provident fund services

Yiangos A. Kaponides, Partner



www.pwc.com.cy

© 2015 PricewaterhouseCoopers Ltd. All rights reserved

We support you to create the value you are looking for in the shipping industry by providing specialised and innovative solutions based on quality. Together we build relationships based on trust and we say things as they are, to assist you to deal with issues that tomorrow will prove important. We adapt our expertise and the power of our global network to your specific needs helping you make the difference.

We do more than just consult We deliver

Shipping

CONTACT INFORMATION: Salamis Shipping Services Ltd

Address: Tel: (+357) 25899999 | Fax: (+357) 25563426e-mail: [email protected] | Website: www.salamis-shipping.com

SalamisSHIPPING SERVICES

S alamis Shipping Services Ltd, a mem-ber of the Salamis Organisation, is a well-established ship-ping company which was founded over 55 years ago, providing total transport and

shipping solutions under one umbrella.At Salamis Shipping Services there is a hard-working team, known for its ability to identify and execute the most appropri-ate transportation solutions, tailored made for each customer’s needs and expecta-tions.

The flexible set-up of our company with local offices across Cyprus, and in cooperation with Salamis Shipping S.A., the affiliate company in Piraeus, Greece, we guarantee fast and quality services.

We provide parallel services as port operators and port agency for third-party vessels, such as cruise vessels, bulk carri-ers, container ships and tankers, calling at Cyprus ports and anchorages.

SERVICESPORT AGENCY AND PORT OPERATIONWe represent many Shipping Lines from different sectors, such as cruise liners, bulk carriers, RO/RO carriers and tank-ers. We have a considerable advantage by using our own equipment for the loading and discharging of mostly RO/RO ves-sels. In addition, we provide the following shipping services:


• Stevedoring• Ship handling• Provisions supplies - Bonded stores• Fuel and engine oils supply• Technical services, repairs, generators• Spare parts and consumables• Cranes/forklift operations• Crew handling• Container transshipment operations• Surveys

CRUISE VESSELS AND YACHTSThe most popular cruise liners world-wide trust us for providing port and tourist services. In addition, we have a dedicated team for VIP handling in the yachting sec-tor.

CARGO HANDLING, OCEAN SHIP-MENTS/FORWARDINGWe handle multimodal door-to-door worldwide service for any kind and type of cargo. OIL AND GAS LOGISTICSIn the light of recent developments in the oil and gas industry in Cyprus, our com-pany has invested in this field and, in this respect, we can provide storage facilities, supplies, tug boat services, crew handling, hotel accommodation and transportation, cargo handling, road transportation and special projects.

AIR FREIGHTWe maintain perfect relations with the most reliable airlines which allocate us the requested space to/from any destination.

TIR TRAILER ROAD SERVICECIR Ltd belongs wholly to Salamis Ship-ping Services Ltd and specializes in the road transportation of all types of cargo, reefer or dry. CIR Ltd is organized to offer reliable, safe and fast transportation of goods, aiming to keep its customers satisfied to the maximum possible level. The company owns a considerable num-ber of new Reefer and Tilt Trailers as well as flat platforms trading mainly to /from Cyprus, Israel, Greece and Central Europe.

LOCAL TRANSPORT - CUSTOMS CLEARING - WAREHOUSEInland haulage in Cyprus is a vital part of our logistics package. With our own fleet of truck units and platform trail-ers, we can carry promptly any kind of cargo, machinery and containers to and from any place in Cyprus according to the customer’s requirements. Our highly specialized Customs Clearing Depart-ment offers all customs services, includ-ing warehousing and logistics, for dry and refrigerated cargoes. A direct link with the Cyprus Customs Office and the Cyprus Ports Authority enables online access to a complete and quick Customs Clearing Operation.

MARINE INSURANCEWe offer Marine insurance (All Risks, FPA, Class “C”, etc.) for your cargo, of-fering the best and lowest-cost protection against any risk you intend to cover.



CONTACT INFORMATION: UiBS

Address:

UiBS COMPANY PROFILEUiBS is a leader in Microsoft® licensing, architecture, deployment, development, infrastructure and distribution of enterprise and mid-sized public and private cloud so-lutions and distribution of unified commu-nications serving the shipping, hospitality, financial, real estate and business Sector. UiBS has shown proven real world exper-tise with worldwide reach in the past dec-ade to over 30 countries across the globe. UiBS is one of the first Microsoft® part-ners in the region to receive the Azure Cir-cle Partner distinction aiming to provide business technology solutions and managed services globally and an active member of the Cyprus Shipping Chamber and a member of the ICT Sub-Committee, the e-Navigation Working Group as well as a full member of the Cyprus Chamber of Commerce and Industry. UiBS is celebrating its 10th year anniversary in 2015 and it is currently influencing, sup-porting and enabling thousands of users.

STRATEGIC PARTNERSHIPS Microsoft® Corporation Gold Certified Partner HP Solutions Provider CISCO Systems Solutions Provider THEOVA UHS Enterprise Solutions Provider MICROS-FIDELIO Preferred Solutions Associate JCC Payments Systems eCommerce In-tegrator ADA Computer Software Limited Infra-structure Integrator CODie software products e.k Infrastruc-ture Integrator

LICENSING SOLUTIONS Volume licensing is complex, but through a managed procedure we assist you in com-paring what software your organization already owns and has deployed, making


the options for your next investment very clear with a common goal; to reduce costs, simplify procurement, and increase efficiency, all while supporting your strategic business vision. We specialize in selecting the proper licensing agree-ment to meet your business needs and we become your trusted worldwide software licensing advisor.

SOFTWARE ASSET MANAGEMENT SAM SOLUTIONS Our SAM service has proven to be one of the most strategic, credible, and reliable processes and procedure for your or-ganisation. We provide optimal software licensing asset consolidation and as SAM experts we specialize in alleviating any and all SAM complications while main-taining an unbiased approach regarding your unique solution.SAM as a Service is an onsite and remote dedicated service featuring:• License Management • SAM Process Management • Contract Management • Reporting and Alerts • Service Levels and Training

MANAGED MICROSOFT® IT SERVICESTo further reduce costs and improve ef-ficiencies we provide superior Microsoft® Infrastructure and Application outsourc-ing. Our services provide a baseline of core service functions on which specific Microsoft® technologies and applica-tions are monitored and controlled. Microsoft® infrastructure services and applications are delivered in a controlled and predictable way as a utility, allow-ing organizations to focus on strategic initiatives – and not be distracted by the enabling technologies. • Unified management on premise and

on cloud

• IT service management• Infrastructure provisioning• Configuration Management • Service Baseline maintenance• Escalation management • Capacity and Change Management • Infrastructure Support Services • Consulting

CLOUD AND WEB APPLICATION DESIGN &DEVELOPMENTUiBS develops proprietary application prod-ucts using the Microsoft® .NET framework. Our team is comprised of Microsoft® Certi-fied Professionals. Based on the Microsoft® Software Framework MSF. Our expertise drive the delivery of exciting, effective web de-sign that takes advantage of the latest technol-ogy practices. The company has created and implemented hundreds of solutions for a va-riety of applications and data-driven websites, and prides itself on producing sophisticated visual solutions and user interface designs that are intuitive, functional and aesthetically pleasing.

Polykarpos Yiannoudes




LEADING CHANGE

CloudComputing Advisors

UnifiedCommunications

Global EnterpriseAgreement SolutionsMicrosoft® Volume Licensing

Software Asset Management

ManagedIT Services

EnterpriseIT Consulting

WebDevelopment

UiBS United Business Solutions Ltd 2005-2015. 1 Agias Zonis Street, Pentadromos Centre, Office B401, CY-3026, Limassol, Cyprus. All Rights Reserved.

CALL CENTER+357 7777 [UiBS] 8427 [email protected]

PROFESSIONAL SERVICES

EUROPEFIDES, THE EUROPEAN ACCOUNTING, AUDIT, TAX AND LEGAL ASSOCIATION FOR MEDIUM-SIZED COMPANIES, HELD ITS ANNUAL GENERAL MEETING AND CONFERENCE IN NICOSIA LAST MONTH, SPONSORED BY EUROBANK CYPRUS AND THE CYPRUS TOURISM ORGANISATION. THE ASSOCIATION CURRENTLY COMPRISES TAX CONSULTANTS, CERTIFIED ACCOUNTANTS AND LAWYERS FROM AUSTRIA, BELARUS, BELGIUM, CYPRUS, FRANCE, GERMANY, HUNGARY, ITALY,

MALTA, NETHERLANDS, ROMANIA, SPAIN, SWITZERLAND AND THE UNITED KINGDOM. THE OUTGOING PRESIDENT, SIMON MARSH (PARTNER, WSM ADVISORS LTD, UK) AND HIS INCOMING SUCCESSOR, STEPHEN BALZAN (PARTNER, ACT ADVISORY SERVICES LTD, MALTA) SPOKE TO GOLD ABOUT THE AIMS AND WORK OF EUROPEFIDES. By John Vickers | Photos By Jo Michaelides

Gold: When was EuropeFides founded and what are its main objectives?Simon Marsh: It was founded in 2007, originating with a number of member firms in France and Germany in particular. The aim was to bring together professional firms servicing small and medium size businesses across Europe in four professional disciplines: law, tax advisory, accounting and auditing. It’s one of the few international networks to cover that range, so when our clients are looking to operate in different jurisdictions throughout Europe – whether they are looking to set up a company, needing assistance with employ-ment contracts, looking to acquire a business or simply wishing to open a business – we can provide them with all the services that they need in that jurisdiction.

Gold: How do you select your partner firms in the various countries?Stephen Balzan: Until now, the process is that we contact the firm and carry out due diligence on it to decide if we consider it wor-thy of becoming a member of EuropeFides. The members then vote and the prospective member firm needs a two thirds majority. Right now we have members in 15 countries and we’re in the process of increasing that number, especially in places where we don’t yet have a representative such as Scandinavia and Eastern Europe.

Gold: What can you offer that the Big Four accounting firms or major legal firms can’t?S.M.: Our member firms already support

small and medium-size businesses and they are our main focus. So when clients ask for assistance in another jurisdiction, the member firm can offer that support through one of the other members of the network. The alternative is, indeed, to go to one of the Big Four firms but, in addition to the higher cost, the big firms aren’t so well directed towards supporting the SME sector. Consequently, we’re offering our member firms an opportunity to support their clients in other professional areas and most importantly in other countries in Europe and that’s the difference between us and a number of other organisations. There are international organisations for account-ants and others exist for lawyers but there are no serious competitors in this market


Simon Marsh

Stephen Balzan

space that enable firms to support SME clients and their particular require-ments across Europe.

Gold: So EuropeFides was set up in response to the fact that cross-border and international trans-actions are playing an increasingly impor-tant role in today’s world?S.M.: Yes. The original founding firms knew one another. Subsequently, newer firms have been those that the founders have dealt with and had a good experience with, so they have come with a recommendation attached to them. When, for example, there were some very serious issues in Cyprus for a while, it was very useful for me in London to be able to find out what was happening from a reliable source – our member firms here in Cyprus – so that I could then talk to my clients and help them understand the opportunities here and the risks involved. So EuropeFides is all about member firms looking after their clients and providing a service that simply wasn’t available at the time and that’s proving to be increas-ingly popular, now that we are – hopefully – coming to the end of the recession. There is a lot more cross-border transaction and traffic happening and this meeting in Cyprus is a great opportunity for the member firms to be talking to one another.

Gold: What are you hoping to achieve with this conference?S.B.: Our two meetings a year and the Annual General Meeting are valuable opportunities for the members to meet and network, to learn from one another, to discuss issues, and to get to know new people and firms. Personal con-tact remains very important.S.M.: The AGM is about the members com-ing together whereas the conference has a more instructive character; it’s more about seminars and members sharing information about their respective jurisdictions. Two of the topics to be dealt with in the conference – money laundering and family offices – are increasingly important around the world, and not only to our members.

Gold: The general impression is that both subjects have more to do with big corpora-tions and wealthy individuals than SMEs, which is your Association’s main focus. What’s the connection?S.M.: Money laundering is a really big topic for everyone. You only have to look at the fines meted out, particularly by the United States but also in Europe, to recognise how important it is. Where there are sanctions be-


ing applied against assets, such as those against Russia, people are inevitably going to be trying to protect their assets by moving them around, maybe in compliance with international anti-money laundering regulations but maybe not. One of the difficulties for a small or medium size organisation is finding the time to carry our background checks on potential clients and that has, of course, increased the cost of taking clients on. So we are keen to explore ways of keeping our costs down while meeting regulatory requirements.

Gold: What about Family Offices? They are for High Net Worth Individuals, not SMEs.S.B.: You are correct but don’t forget that, relatively speaking, a big firm in Malta or Cy-prus, which both offer Family Office services and are keen to attract HNWIs, may be con-sidered an SME. A further link is that many small and medium size businesses are owned by people who are very wealthy and they may be located in a number of jurisdictions, so an association like EuropeFides is well-placed to deal with them.

Gold: Is a Family Office any different from the wealth management department of a legal or auditing practice?S.B.: It’s a little bit different in that a Family Offices may cater for the needs of a single fam-ily, in contrast with a wealth management firm which can deal with any number of clients. So there is the personal aspect and this ensures greater confidentiality and very precisely tai-lored services.S.M.: I agree that the personal element is what makes the difference. Large organisations tend to be more product-driven and there have been many instances of such organisations being involved in mis-selling. Firms catering to the SME sector can’t afford to take the risks that the big firms are prepared to take. They have to do things right so it is in the interest of the smaller firms to make sure that the service they provide is as good as it can be.

Gold: Membership of the Association ap-pears to be rather limited at present (just one or two per country). Why is this? Are you purposely trying to remain small?S.M.: The main aim in the first instance was

to have coverage in the various jurisdictions and to ensure high standards of profes-sionalism shared by all member firms and then look to multiply that. We certainly

could – and can – have more members and we do have a much broader coverage in Ger-many, for example. The UK representation is centred on London, which is where the vast majority of queries are directed. That said, we have only one member firm in the Iberian peninsula and that clearly cannot be right. At the early stage of the organisation we wanted to build and gain a broad coverage and now we are looking to expand it.

Gold: Simon, how would you describe your term as President?S.M.: I have been fortunate to be President and I have thoroughly enjoyed my one year term. The organisation is now set up so that there is an executive of three – a president, and first vice-president and a second vice-pres-ident – but I was ‘parachuted’ in as President so I only had a year and I feel that, although I have achieved a great deal in that year, I haven’t quite finished everything I would have chosen to do. We have increased membership, we’ve improved our communication, and we have a new website at www.europefides.eu which Melina Pyrgou (of Pyrgou Vakis law firm in Cyprus) has been very active in setting up. We’re moving forward with publications to get the message across to our members and to start sharing it with the outside world so the main things that I wanted to do are happen-ing but a year is never enough! However, I’m delighted to be handing over to Stephen who I know is going to be driving those other things forward.

Gold: And finally, Stephen, what will your objectives be when you take over as Presi-dent?S.B.: My primary focus will be on increasing the number of countries in which we have members. We want to show prospective mem-bers that EuropeFides is an active organisation, with a lot going on and we shall certainly be raising our communication. As Simon has said, it’s a lot to do in a year but I will certainly be devoting a lot of time and energy so that when we meet in Frankfurt next year, we’ll have an even better organisation than we do today. It is already better than it was a year ago and I am sure that future presidents will be aiming to do the same. We already know who they are, so in 2017, it will be Melina Pyrgou from Cyprus who will be talking to you!

G old: You’ve told how your pas-sion for LEGO led to the com-pany giving you a place on its advisory board when you were just 12 years old. What kind of advice were you able to give as a kid?Martin Lindstrom: I was able to see the world of LEGO from a consumer point of view – as a fan

– and thus I was able to tell LEGO how it felt like to be a fan. This was completely new to them but it led to the creation of the Fan club, magazines, and all the stuff we expect today but which were completely unknown back then. There were hardly any fan clubs around and certainly no LEGO one. Gold: That experience might logically have led you to want to work for LEGO but, instead, you became fascinated by the business of branding. What was the spark that took you into the sector that has made you an internationally-known expert?M.L.: I wish I could tell you but I really can’t! I was crazy, I guess! I mean, when I was 8 years old I persuaded my pen pal in the US to record all the TV commercials she was watching and to send them to me on a large Betacam SP tape so that I could watch them. Branding has always fascinated me but LEGO shaped it as I was forced to look at the LEGO brand from a company point of view. Naturally, the fact that no-one showed up in my LEGOLAND theme park until I persuaded a local advertising agency to sponsor me also played a big part in my interest in advertising and branding as I grew up.

BRANDING

IN THIS EXCLUSIVE INTERVIEW, INTERNATIONAL BRAND EXPERT MARTIN LINDSTROM, WHO WILL LEAD THE 2ND BRAND CONGRESS IN NICOSIA ON 27 MARCH, TALKS ABOUT HIS CAREER, HIS BOOKS, AND THE ART OF ADVERTISING, BRANDING AND MARKETING.By John Vickers

the dreGold: Is there a simple explanation of what makes a brand suc-cessful?M.L.: No, but there are some rules: (a) Make the message simple, differentiated and attention grabbing; (b)Make it emotional, not rational; and (c)Engage the audience and make them feel they are part of the process of spreading the message by word of mouth Gold: Once people feel that they can trust a brand, how impor-tant is it to keep the brand in the public eye?M.L.: “Out of sight, out of mind”. Remember the line. Unfortu-nately every marketer has witnessed how true it is. We forget, and we forget very fast. Why does Coke spend billions of dollars every year reminding you about…Coke? If you’re not visible – in par-ticular in today’s world – forget about existing. Gold: So, if Coca-Cola didn’t advertise for a year, how would that affect their sales?M.L.: In Year 1 they would most likely drop by 10-11 %, in Year 2 they it would drop 20% and in Year 3 sales would be halved. That’s my best guesstimate based on similar scenarios. Gold: But even the most successful brands still have unsuccess-ful products so, ultimately, there would seem to be no guar-antee that a good brand means that people are going to love everything it does. Is this true?M.L.: You’re absolutely right. Every day, around 150,000 new brands appear in the US alone. They all can’t be successful. You might have a wonderful toothpaste brand – but did you establish a powerful distribution strategy, visibility at the dentist, and at the school dentist? All these points are just as important – they are all


Living


eam If you re not vis

ible in today s world, forget about existing

The vo

lume of messages we re all exposed to everyday has tripled over the past decade

BRANDING

ways to build brands – and things you can hardly establish on Day One of your new brand.

Gold: Apart from areas where technology has outpaced certain companies (Kodak, Nokia, etc.), are there clear reasons why, once a brand is established, it may not survive?M.L.: Yes. If the brand makes a major mistake – BP, for example, causing major losses and riskingbankruptcy – or if the category no longer seems relevant (e.g. Blockbuster, etc.); or if some ma-jor strategic decisions are wrong, as we saw nine years ago when LEGO increased the size of its bricks and then lost 25% of its sales and almost went bankrupt. Gold: Is there a standard life expectancy for a good brand? In 20 years’ time, for example, will the top 10 brands in the world be the same as today?M.L.: Not really. Here’s the issue: the concept of commercial brands is fairly new – around 150 years old. The reason why they died in the past was due to a lack of experience. Now that they have the experience, most of these brands will stay forever, even when their industry seems obsolete. Think about Fuji Film – it no longer produces films but medical equipment. The brand holds the trust – whatever the company produces can often be placed beneath this trust umbrella. Gold: Given the global market and the huge advertising budg-ets allocated to keep major brands in the public eye, how dif-ficult is it to establish new ones?M.L.: It’s amazingly hard – and amazingly easy. Hard because the volume of messages we’re all exposed to everyday has tripled over the past decade. Easy because it’s no longer only the big guys who can gain attention and visibility for cheap money – Mr. Nobody in North Carolina can do the same, and indeed does the same, making it easier for small businesses to crack the brand code. Gold: You have carried out some impressive (and costly!) re-search on branding issues. What made you investigate, for ex-ample, the sensory aspects of why people buy? It’s an unusual concept and yet it revealed some fascinating information.M.L.: It did. We learned that subliminal advertising does indeed work, and it led me to the “Smash Your Brand” theory – the con-cept based on the Coke bottle from 1915. If it’s smashed, you’ll still be able to recognize the brand. The same applies to brands such as Tiffany’s, Apple, or LEGO – remove the logo and you’ll still be able to recognize the brand due to its Smashables (sym-bols). We also learned that only contextual product placement works, and only if the context is relevant. What’s more, we discov-ered that sex doesn’t sell if it’s out of context and we learned that our combined senses have triple the power to persuade us to buy something than if we only use the sense of sight.

Gold: You went even further with the research for what would later become your bestseller Buyology. Did you begin with your own theories and hope to have them proved right or did you start with a ‘blank page’ and wait to see what people told you?M.L.: In research you always need to work with hypothesis and then prove if it’s wrong or right. And that’s exactly what I did. And I guess I was kind of lucky – phew! My theories seemed to be correct! Gold: In your last book (Brandwashed) you moved from un-derstanding consumer behaviour to revealing the ‘tricks’ that advertisers use to persuade us to buy certain products. Did you do this because you felt that marketing/branding practices had gone too far or overstepped some kind of ‘moral’ line?M.L.: Yes, and because of my prediction that something called “privacy” would be the Next Big Thing. Remember that back then this wasn’t a topic at all – today it is. My books tend to predict the future about 2 years ahead. Gold: You have recently been looking into the role of Social Media in advertising and branding. How important has this role become and does it mean an end to more conventional marketing methods?M.L.: No, it will be a combination. During the latest SuperBowl in the US, you might have noticed that nine out of the 19 com-mercials contained poppies, two thirds featured children and the rest some type of animal. This is new and it all comes from the Internet where the Top 3 categories contain these. This is the first time ever that the Internet and Social Media are dictating the trends in advertising, and thus it’s the first time the public is in charge. In short, Social Media is here to stay and you could say that the branded message is going social and is thus relevant. Gold: What is it that keeps you willing to maintain such a busy schedule of advisory projects for companies requesting your advice on branding issues? Is the subject still as exciting to you as it was 15 years ago?M.L.: I’ve never gone to work. It’s like I’m living in a dream. I hope I’ll never wake up! Gold: What can those attending the 2nd Brand Congress in Nicosia expect to hear and learn from you?M.L.: I’ll be extremely practical and I invite everyone attend-ing to bring their own case study with them, which I’ll evaluate live on stage. In short, besides sharing the latest from across the world – social, online, offline, sensory, neuroscience and word of mouth – I’ll also provoke, stimulate and, hopefully, give everyone concrete thoughts for them to home in on what they should do in the future in order to build a business or a power brand.


Every day, around 150000 new brands appear in the US alone

I ve never gone to work. It s like I m living in a dream.

I hope I ll never wake up!

OPINION

Property owners are not,

wealthy

Inhuman and Absurd Cyprus immovable property tax should not be a wealth tax

info: George Mouskides is General Manager, FOX Smart Estate Agency and a US Certified Public Accountant, Licensed Estate Agent

I n 2011, the previous government raked in €11 million from the Immovable Property Tax (IPT). In 2012, revenues from the same tax shot up to €25 million. As regards 2013, the previous government had proposed a tax hike

in order to raise the sum of €200 million. In the end, the administration that came into office in March 2013 lowered that figure but still managed to collect €100 million for 2013 as well as for 2014.

The question to be answered is abundantly clear: What kind of tax is the IPT? And why has it multiplied by ten times in just two years? It is surely not a tax on income generated by property, since properties that generate no income, like barren plots of land, are taxed as well. On the other hand, properties that earn rent also pay IPT, income tax and the defence levy, the result being that they are in effect being triple-taxed.

It is also not a fee, because it does not reflect the cost of any kind of service offered by the state to the property or the property owner. As far as the government is concerned it is a wealth tax.

Let it be clear that property owners are not, by definition, wealthy as they might be burdened by loans, which are sometimes larger than the value of the property itself.

The government’s finances are in very bad shape and the administration is trying to collect funds for the state coffers by imposing taxation, regardless of the damage this may inflict on the economy.

Political parties also regard the IPT as a wealth tax, if one is to judge by their readiness and willingness to vote for it without a second thought.

Imposing absurd taxes is the easy way out for both the government and the political parties. Instead of cutting back on reckless state

expenditure, they prefer to sacrifice property owners.

Our industry’s position is clear. The IPT should not be a wealth tax. If the government really wanted to tax wealth, it should have taken into account the net value of these properties, bringing into the equation the loans on these properties as well. A question that begs for a convincing answer is this: Why don’t they tax stocks, bonds, works of art, yachts, etc., if they wish to tax wealth? The probable answer is that property owners are an easy target.

Why, then, do I describe the tax in question as absurd and inhuman?

In addition to all the reasons mentioned above, this tax is collected from owners who, in their vast majority do not have the ability to pay it in the first place. One way or another, law abiding citizens, property owners will find the cash to pay the tax. However, the result is to put another stranglehold on market liquidity and force owners to think about selling their properties. It is all an attempt to collect money to pay the civil service and which will end up in a black hole.

With all these facts on the table, it is clear that what is needed is the restructuring and reduction of all taxes related to immovable property.

They have reached prohibitive levels and are choking transactions and the much-needed real estate sector recovery.

The IPT and the municipal property tax must be incorporated and reduced to reflect the level of services, (parks, pavements, bicycle lanes, street lighting, related to life quality), and the infrastructure offered to properties by the municipal authorities.

Only then will the particular tax stop being inhuman and absurd and, consequently, will be paid by citizens without complaint.

By George

Mouskides

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES Gold 85


encouraged us to focus on the areas of law that we liked most. This has proved to be good for the company as we decided to specialize in new areas for the firm in order to bring in more work. This is now starting to pay off.”

Sophia Neophytou specialises in family law and, having a postgraduate diploma in crimi-nology and criminal justice, Christos initially focused on criminal law before deciding to set up a corporate department which, he says, has done very well.

Unlike many professionals, Neophytou’s passion for his work has not faded over the years but he is the first to acknowledge that the Cypriot justice system leaves much to be desired in 2015.

“First of all, look at the district court build-ings in Nicosia, which date from the early 1900s,” he says. “Other towns have new, pur-pose-built court complexes but in the capital the buildings are spread out, they lack heating and airconditioning. It doesn’t take a lawyer very long to decide that, in such circumstances, maybe criminal law is not that fascinating anymore!”

The maxim “Justice delayed is justice de-nied” frequently comes to mind in Cyprus, due to the long time it can take cases to come to court. Christos Neophytou speaks from personal experience: “I went to court yesterday about a case that we filed in 2010 and we are still waiting for a trial. You start to wonder how there can be justice when someone is waiting five years for a case to reach a trial.”

Warming to his subject, Neophytou adds some more suggestions about improving the system. It’s a long list, he says: “First of all it’s not efficient in 2015 to have to be sticking stamps on official documents. In other coun-

“It really was the only thing I wanted to do.”He did indeed study law in Greece and he

now works at E. Neophytou & Partners LLC, the firm set up by his father in 2010. The fam-ily connection naturally made things fairly sim-ple when it came to finding work. In fact, both Christos and his sister Sophia took the same course of study, later following it with a Di-ploma in Criminology from the University of Leicester, and they work together in the firm. The certainty of having a job did not mean taking things lightly, however. “I remember that it was a Wednesday when I received the result of my final exam,” says Neophytou. “I returned to Cyprus on the Thursday and came to work on the Friday. That’s how keen I was. My father had told me that I could take a couple of months off before starting but I said, ‘No, I want to begin at once’.”

Erricos Neophytou had specialized in land law and real estate for many years and, says his son, until 2013, work on property issues and drafting of purchase agreements accounted for perhaps 80% of the firm’s business. Today the number of foreigners purchasing retirement homes is way below its pre-crisis level as people prefer to ‘keep their money safe’. “Actually, now is the time to buy if you have money,” says Neophytou, “but sellers are now waiting for the present low prices to rise to where they were before. This is never going to happen. Land in Cyprus was overpriced for a long time and I think it is going to start moving now because it has now reached what should have been the real price.”

Fortunately, he never focused on his father’s particular area of expertise, Christos says with the benefit of hindsight. “My sister and I have a very good relationship with our father and he

Back in the 1990s when many of his school-friends were dreaming of becoming astronauts or famous footballers, Christos Neophytou was much more down-to-earth and quite certain that he was destined to become a lawyer. “For as long as

I can remember, it was what I wanted to do,” he says, sitting in – where else? – the confer-ence room of the family law firm. Of course, the fact that his father had been a lawyer since the ‘70s played no small part in his decision, although he insists that Erricos Neophytou hadn’t make a great effort to persuade him to enter the profession:

“I never doubted that I would become a lawyer. When I was younger, just hearing my father talk about his job or going to the court with him was enough to inspire me and trigger my interest.”

The extent of Neophytou’s determination to take up law is reflected in what happened not so long ago when he chanced to meet his primary school teacher whom he had not seen for many years. When they finally realized who each one was, the teacher told him, “I’m sure you are now a lawyer because at school you used to tell us that it was what you wanted to be.” Later, when he applied to go to university in Greece, there were only three options for studying law and his teachers advised him to choose some other subjects in order to be sure of getting a place. “My reply was that if I didn’t get accepted to do what I wanted, I didn’t want to do anything else!” he recalls, laughing.

COMPANY PROFILETODAY,

WHETHER YOU SUE SOMEONE

FOR €10 OR€10 MILLION,

THE PROCEDURE IS THE SAME

tries, people pay online by credit card. Second-ly, if it was in my power I would try to appoint more judges and I would separate small claims – up to, say, €5000 – from the rest. Today, whether you sue someone for €10 or €10 million, the procedure is the same. Thirdly, I would do something about the way judges are appointed. In Cyprus, you need a law degree, seven years of experience and a successful in-terview. No-one can seriously think that this is enough.”

Neophytou does not see arbitration as a way of reducing the burden on the court system, noting that “Cypriots are not very interested in it” and that it tends to be used only in contrac-tual disputes.

The justice system is not the only area in which a great deal needs to be done in

Christos Neophytou’s view, which remains pessimistic in the short term, due in part to the high level of unemployment but also to what he describes as the ‘Cypriot culture’. “We are all familiar which what has happened to Cy-prus Popular Bank (Laiki) and, more recently, Cyprus Airways. Both were terribly misman-aged, the directors were appointed on the basis of political party affiliations and they then employed their friends and relatives. If foreign-ers are not brought in, I fear that this culture will never change in any new company that is set up. I’m sorry to say that, in my opinion, we need outside experts to manage things for us.”

He also points to the difference between how things are done in Cyprus and in other competing jurisdictions when it comes to set-ting up a company, for example: “In Seychelles

I can register a company name in three hours. Here, it takes five days. To change a director here we need 20 days; in Seychelles it takes one hour. This is the difference in culture that I mentioned earlier. And these are very simple things that can and need to be done if we are to attract new business and investment.”

And yet, for all the things that need to be done in Cyprus, Christos Neophytou remains an optimist at heart and, many years after be-ing inspired by his father’s stories, he still has no regrets about his choice of profession.

“I work with my family, I’m not tied to the office, I travel a lot and meet lots of people. Of course things are not entirely as I imagined them as a kid – it’s not Boston Legal here! – but I am just as keen on my work now as I was on the first day. Not many people can say that!”


Christos Neophytou

Erricos Neophytou

SophiaNeophytou


THE SWISS NATIONAL BANK’S SURPRISE MOVE LAST MONTH TO DROP ITS EURO PEG SENT SHOCKS THROUGH THE CURRENCY MARKETS THAT LED SOME FOREX FIRMS TO CLOSE DOWN. WHAT HAPPENED?By Andreas Kontos

A CRISIS MADE IN

On January 15, the Swiss National Bank (SNB) took the markets by surprise when it decided to abandon the cap on the currency’s

value against the euro, which it described as “no longer justified”. It seemed to be acting in a way which reminded many observers of the operations of national banks in the ‘80s and ‘90s. What SNB Chairman Thomas Jordan did that morning was to create a financial shockwave which sent investors and traders running for cover and left banks and some Forex brokers either nursing some big losses or even closing down.

One of the main roles of a central bank is to encourage market stability and one way in which this is achieved is by central banks giving both traders and investors warnings of possible future changes in monetary policy.These notifications can come in the form of “forward guidance” whereby the central bank provides a specific timescale for how it in-tends to make changes to monetary policy, or through subtle changes to the tone of its lan-

CURRENCIES


looked on in alarm at the downward trend of the EUR/CHF currency pair. The coun-try may be primarily known for its banking sector but it is also a producer of high-value quality exports such as pharmaceutical products, timepieces and advanced tech-nology. It also earns considerable revenues from tourism.

One only needs to take a look at the Big Mac to get an idea of how much more ex-pensive things have become since the SNB decided to take action. At today’s prices, a Big Mac in Switzerland will cost you CHF6.50 which, at the current exchange rate is a whopping €6.30 when in the rest of Europe it averages around €3.00

So we get it, Switzerland is expensive. However, back in August 2011 the euro was in free fall. At one point it looked as if the EUR/CHF would start to trade under the 1.0000 level. The very idea of EUR/CHF hitting parity was always going to be a step too far and that was when the SNB acted for the first time. It had had enough of European Union dithering and decided to buy huge quantities of euros in a bid to establish a floor at the EUR/CHF 1.2000 level with thoughts of raising it even higher to 1.25000. What followed was a period of price stability for some 4 years as the EUR/CHF traded in a very narrow range around this 1.2000.

On January 15, the SNB announced that it would no longer try to defend the EUR/CHF 1.2000 level. It took the move as it had become apparent that trying to maintain the EUR/CHF 1.2000 support level would become very difficult if the European Central Bank were to announce an expected massive program of stimulus. Indeed, the following week, ECB President Mario Draghi revealed that it would soon begin to pump €60 billon per month into the eurozone.

My gut feeling is that Thomas Jordan

SWITZERLAND

guage in press releases or when addressing analysts. Forward guidance has been used as a policy tool for some time, by both the Federal Reserve in the United States and the Bank of England. Recently, for exam-ple, Mario Draghi, Head of the European Central Bank used the term “open ended” when discussed its policy with regard to the eurozone quantitative easing programme.Traders and investors need to have infor-mation fed to them on a gradual basis and some of these market participants have become very good at reading between the lines of ‘central bank speak’ and this has given them an edge when it comes to trad-ing and investing.

To understand what happened on Janu-ary 15, we need to rewind the clock to August 2011 when the eurozone was in the middle of a financial crisis that was making investors very worried about the stability of the European project. The so called PIIGS of the euro area (Portugal, Italy, Ireland, Greece and Spain) had dragged down the euro due to the fears surrounding their substantially high debt levels. There were also worries surrounding the viability of Europe’s banks.

This bad news led investors to seek flight towards quality and the perceived safety of the Swiss financial sector meant that many of them decided to park their money in Swiss banks. At the same time, traders also took large bets against the euro as they sold EUR/CHF.

So what’s the big deal? Shouldn’t the Swiss National Bank be happy that Swit-zerland is deemed to be a lake of tranquility when in the rest of Europe faces financial chaos? Well, things are not that simple. Currency stability allows countries that produce goods and services to make long-term plans which affect their ability to sell these products to the outside world.

For over a decade, Switzerland has

n-ng lue

WE SOMETIMES FORGET THAT WHAT HAPPENS IN THE FINANCIAL MARKETS HAS A MATERIAL

IMPACT ON ORDINARY MEN AND WOMEN

got wind of what was going to unfold and the speculation from unsubstantiated sources suggests that the ECB had briefed him with regard to the scale of the euro area’s QE programme. Add to this the po-litical instability arising from the expected election of the radical left SYRIZA party to power in Greece, combined with a ground-swell of discontent from the citizens of oth-er peripheral countries and it was clear that the SNB had little room to manoeuvre.

What followed the shock announcement that the SNB had decided to stop defend-ing the value of the euro was the collapse in the value in EUR/CHF by 30% to the low 0.8000 levels in the space of 30 minutes.

The SNB, which was one of the biggest purchasers of the euro has now discontin-ued its purchasing and it is a case of when it will begin to dump its oversized holding of the euro back onto the market. In effect, the SNB’s massive holding of the euro has now become a downward pressure on the value of EUR/CHF.

The Swiss National Bank has really shak-en up the market and only time will tell if it was wise or reckless.

IMPACTTRADINGFor traders of the USD/CHF and EUR/CHF, participating in these currency pairs now takes on a greater deal of skill. Open posi-tions in the Swiss Franc are now a much more risky affair because history tells us that the SNB takes no prisoners and does what it wants when it wants without any prior warning.


Therefore, if you are going to try EUR/CHF or USD/CHF, you had better keep an eye on Switzerland, including news and comment from the SNB, the Swiss Govern-ment and the country’s legislature. Since the main reason why the Swiss acted as they did in August 2011 was to protect their exports, it is also important to monitor earning releases from companies that are traded on the Swiss Market Index (SMI). If their earnings begin to dive, the cacophony of disapproval that will be heard coming from the big Swiss corporations may be loud enough for the SNB to act once more to push down the value of the Swiss franc.

FOREX INDUSTRYThe Swiss National Bank’s action had, unfor-tunately, a negative impact on some brokers in the Forex Industry. A few of these firms were hit so hard that they needed to find fresh funds in order to take their liquidity levels back to normal while others were forced to close their doors and enter into voluntary receivership.

What actually happened is fairly easy to explain. For the last four years, most Forex traders have actively been buying and hold-ing EUR/CHF, given the safety they felt with a floor set by the SNB at 1.20000. A Forex business that operates a “straight through processing” (STP) model acts as an agent for its clients, meaning that all client orders are passed to the FX company’s liquidity provid-ers. The STP brokers thought that this model did not entail any risk and were happy to earn commission on each transaction. Additionally, most of these brokers guaranteed their clients a negative balance protection scheme, meaning that they would take the hit if a client’s balance went negative due to a sharp market move.

What happened in January has been termed as a ‘black swan event’. That is to say

that what happened on the day of the SNB decision was something that deviated beyond what is normally expected and was extremely difficult to predict.

On the morning of January 15, traders turned on their computers as they contem-plated the forthcoming news from the ECB and the Greek National elections. Traders of EUR/CHF had grown accustomed to trading within a very tight range around the 1.2000 level, with the majority of them holding mas-sive long positions due to the security offered by the SNB floor.

The SNB announcement caught traders, FX brokers and liquidity providers completely by surprise. The majority of traders who had taken long positions that day saw their ac-count balances wiped, while Forex brokers were frantically trying to close positions and liquidity providers sought to turn off the tap as liquidity dried up.

It has been the norm for many years that, retail traders in particular, try to maximize their exposure to the market by using leverage. In simple terms, leverage allows an investor to trade an instrument size that is many times the size of his account. However, on January 15, when the range expanded to unbelievable levels, a combination of a 30% drop and mas-sive leverage levels wiped out client accounts that had sold the Swiss franc. Even with stops in place, the lack of liquidity meant that many investors could not get their stop orders filled at the desired price but only much lower, leaving behind huge negative balances in their accounts.

The Forex brokers who had been acting as agents up to January 15 had thought that their risk was minimized under the STP model. It appears, though, that most bro-kers’ risk management departments had not thoroughly calculated the results of such an

event. Such ‘black swan events’, where vola-tility causes huge negative balances in clients’ accounts, mean that brokers are obliged to make good the negative balances which reside with liquidity providers. In this case, it meant that many Forex companies impacted by their client’s losses found that the 8% capital adequacy ratio had been breached. In light of this, the affected companies had only three choices: (a) to look for fresh investment to square up their balance sheets; (b) to request that the negative balance be made good by their clients; or (c) to go into voluntary liquidation. My prediction is that as a next step, some of the traditional STP brokers will be forced to switch back to a Market Mak-ing model as banks are no longer prepared to have them as counterparties given their weaker balance sheets that will show huge losses due to the SNB’s decision.

Many of these companies could not raise new funding and, since going for new clients would be a very difficult and time-consuming endeavour, they had no choice but to take the hard decision to close down.

SWISS FRANCMORTGAGESLastly, we sometimes forget that what hap-pens in the financial markets has a mate-rial impact on ordinary men and women who live normal lives far removed from the movements of the currency markets. For many years, residents of Cyprus and many other countries across the European Union have been taking advantage of the very low interest rates offered by Swiss mortgage products to finance purchases of immovable property. However, with the fall in the value of the euro against the Swiss franc, mortgage holders have seen the benefits gained from low interest rates eroded by the depreciation of the value of the euro. What happened on January 15 has only made the situation worse as mort-gage holders now have to struggle with a falling property market and negative equity values, compounded by the euro’s depreciation. The problem is not a small one, given that some €3.7 billion worth of mortgages have been taken out in Swiss Francs.

CURRENCIES

THE SNB ANNOUNCEMENT CAUGHT TRADERS, FX BROKERS

AND LIQUIDITY PROVIDERS COMPLETELY BY SURPRISE

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AAAAAAAAAAAAAAAANNNNNN

TTTTTTTTTCCCCCCHCHCHCCHCCCanco

Andreas Kontos is an Executive at Atlascapital Financial Services.info:

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CONTACT DETAILS: 2, Eschilou, Engomi, Nicosia | Email: [email protected] | Tel: 22772945 | Mbl: 99606373, 99449574 | Fax: 22776948

Saturday 28 March 2015 | 8:30 - 14:00 | Bank of Cyprus Headquarters (Ayia Paraskevi) | Nicosia

presents the

ERA FORBUSINESS

THE DIGITAL

For further information contact: IMH, 5 Aigaleo Str., 2057 Strovolos, P.O.Box 21185, 1503, Nicosia, CyprusTel. +357 22505555 Fax. +357 22679820, E-mail: [email protected], website: www.imhbusiness.com

a multidisciplinary design studio

C y p r u s - R u s s i a n B u s i n e s s M a g a z i n e

S

{February 14 – March 13, 2015}

96 Smartphone upgrades to generate $300 billion in 2015 salesDeloitte predicts purchases of one billion units.

ISSUE

47

100 {tax&legal}100 New Year sees three more Double Tax Treaties

101 Tax NewsCyprus formally removed from Spain’s tax haven blacklist + Amendment to the EU parent-subsidiary directive

98 {economy}98 CEOs Less Op-timistic about the Global Economy The results of PwC’s 18th Annual Global CEO Survey.

86

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES OF CYPRUS Gold 93

94 Living in the FATCA Era Cyprus signed an InterGovernmental Agreement with the US in December 2014 on the application of the Foreign Account Tax Compliance Act (FATCA).

95 European Property Still OverpricedCore property is overpriced in almost all markets but, despite this, Europe’s real estate industry expects to be busier and more profitable in 2015.

96 {business}

94 {money}

102 Light My FireInvesting in Cigars

106 A Day In The LifePhilip van Dalsen

102 {lifestyle}102 Light My FireInvesting in Cigars

106 A Day In The LifePhilip van Dalsen

{lifestyle}

MONEY: Lean Auditing: Driving Added Value and Efficiency in Internal AuditBy James C. Paterson 95

BUSINESS: The Gen Z Effect: The Six Forces Shaping the Future of BusinessBy Tom Koulopoulos & Dan Keldsen 96

ECONOMY: European Spring: Why Our Economies and Politics are in a Mess - and How to Put Them Right By Philippe Legrain 99

TAX & LEGAL: Magna Carta Translated by Prof. David Carpenter 101

LIFESTYLE: Us By David Nicholls 105

+ BOOK REVIEWS


THE FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA) IS A US LAW THAT BECAME EFFECTIVE ON 1 JULY 2014 AND IS DESIGNED TO EXCHANGE INFORMATION BY NON-US ENTITIES WITH THE US GOVERNMENT ABOUT FINANCIAL ACCOUNTS THAT ARE HELD DIRECTLY OR INDIRECTLY BY US PERSONS. THE US GOVERNMENT HAS CONCLUDED INTERGOVERNMENTAL AGREEMENTS (IGAS) WITH MANY COUNTRIES, INCLUDING CYPRUS, TO EFFECTIVELY IMPLEMENT FATCA IN THEIR LOCAL JURISDICTIONS

C yprus signed the IGA on 2 December 2014, and a dedicated team headed by Liana Charalambous Tanou,

Chief Revenue Officer in the Inland Revenue Department, is currently drafting the Guidance notes on its application. The IGA will require many entities in Cyprus to take certain compliance steps depending on their classification as Foreign Financial Institutions (FFIs) or as Non-Financial Foreign Entities (NFFEs).

CLASSIFICATIONFunds, Trusts and other personal investment companies are likely to be classified as FFIs if their gross income is largely from financial assets and the entity or the assets are profes-sionally managed by another financial institu-tion like an Investment Manager or Corporate Trustee.

REGISTRATION OR SPONSORSHIPFFIs have to be registered with the IRS Portal and obtain a Global Intermediary Identifica-tion Number (GIIN).These will appear on the public FFI list on the IRS website. The original deadline for FFIs in IGA model 1 countries like Cyprus was January 1, 2015, but registra-tion can still be carried out. As an alternative to registration on the IRS website, FFI-Invest-ment Entities can check if they can apply for deemed-compliant FFI status or they may opt for FFI Sponsorship or Owner Documented FFI, whereby the Sponsoring entity or the bank will perform the FATCA requirements on behalf of the entity.

LIVING IN THEFATCA ERA

compliance

{MONEY}

COMPLIANCE Registration or sponsorship of the FFI is just the first step and, subsequent to this, vari-ous requirements have to be met in order to remain compliant under FATCA, IGAs and the local legislative framework. These require-ments include – but are not limited to – the due diligence to identify account holders (in-vestors) who are US Persons (if any) and the annual reporting of such US reportable ac-counts to the local tax authorities, who will subsequently exchange such info with the US government. Entities have to notify their FATCA status to their banks and other coun-terparties by providing a W-8BEN-E form or a similar certificate.

CONSEQUENCES OF NON-COMPLIANCEFFIs which have not been registered or oth-erwise made compliant may not be able to provide their banks, brokers, custodians or any other counter-party with a withholding certificate (W8 series) that contains a GIIN. After a notice period they become subject to 30% FATCA withholding on payments of US source FDAP income. Banks may even block payments or will no longer allow FFIs to open bank accounts altogether. Moreover, the jurisdiction of an FFI may levy additional sanctions on those FFIs that are not considered compliant.

Some FFIs, such as funds or PICs, decline to register, claiming that they have no US in-volvement of any kind. The aforementioned, however, applies regardless of whether the

entity is owned by US Investors or whether the entity invests in US

securities.

ACTIONS REQUIREDAny Funds, Trusts and other investment enti-ties that are deemed to be FFIS should register with the IRS as soon as possible if they wish to be issued with a GIIN and be included on the IRS FFI List, or alternatively be sponsored by a provider of such service.

Passive Non-Financial Foreign Entities (NFFEs) are not required to report to the local tax authorities but they must instead disclose the identity of their controlling US owners to their banking institutions, where they hold a financial account.

The regulations of FATCA and IGAs are quite extensive and complex. Practitioners are therefore advised to properly train their staff and to dedicate sufficient time to review-ing client structures. Professional assistance may also be sought from FATCA specialized teams of global organizations such as Ami-corp, who are well positioned to provide such services, including classification, registration, sponsoring,developing and implementing compliance program, due diligence to identify US Investors and annual reporting.

FUNDS, TRUSTS AND OTHER INVESTMENT ENTITIES

THAT ARE DEEMED TO BE FFIS SHOULD REGISTER

WITH THE IRS AS SOON AS POSSIBLE

info: Elia Nicolaou is Managing Director of Amicorp (Cyprus) Ltd.

By Elia Nicolaou


{MONEY}

ccording to Emerging Trends in Real Estate: Europe, a new publi-cation from PwC and the Urban Land Insti-tute, core property is overpriced in almost all markets but, de-

spite this, Europe’s real estate industry expects to be busier and more profitable in 2015. This optimism is clear, despite weak fundamentals and economic conditions, as well as an un-dercurrent of concern about the geopolitical situation in parts of the world. The confidence comes from the availability of capital. Real estate is awash with equity. Most Emerging Trends in Real Estate: Europe’s survey respondents and interviewees anticipate an increase in both prime and secondary values as a result of greater liquid-ity and the need to deploy capital in this asset class.

In many of Europe’s main markets, growth in values has far exceeded any rise in occupier activity. Across the eurozone, in particular, rental growth remains elusive. This disconnect between capital flows and fragile occupier de-mand is expected to be, once again, a feature of the markets in 2015.

Nearly two thirds of those surveyed by Emerging Trends in Real Estate: Europe believe that core property is overpriced in almost all markets. In this respect, the major influences are the equity-rich sovereign wealth funds and pension funds and insurers from Asia, which have helped drive up the price of core assets in “gateway” cities such as London, Paris, Milan and Berlin. These players are expected to play an even bigger role in European markets in 2015. Private equity firms from North America will also remain a force.

What’s true of equity is almost equally true of debt. Non-bank lenders, such as debt funds and insurance companies, are expected to raise their game significantly, providing much-needed diversification from the bank-dominated land-scape of the last boom. Though credit has eased considerably for real estate in Europe, it is not the same everywhere. The most liquid markets of Northern Europe expect the flow to swell further. In Southern Europe, where domestic lenders are still constrained, respondents think 2015 will bring an improvement while in the Nordics and Central and Eastern Europe they are less exuberant in their expectations. Finding finance for development remains a challenge.

And yet there is just a seed of doubt among some that the debt market has rebounded too far, too fast. Spending the money effectively is also a challenge, but there is no doubt that it wants to go into real estate. The overwhelming majority – 70% – of those surveyed by Emerg-ing Trends in Real Estate: Europe expect more equity and debt to flow into their markets in 2015. Any concerns over pricing are being assuaged by the fact that in a low interest rate environment, the income return of real estate remains attractive compared with other asset classes.

The high price tags and scarcity of acquisi-tion opportunities for core assets is forcing some to consider taking on more risk, simply to participate in real estate investment. But capital nonetheless remains choosy, both about the kind of assets it wants and where it will go.

According to Emerging Trends in Real Estate: Europe, the five leading cities for investment prospects in 2015 are a mix of German stal-warts and recovery plays: Berlin is Number 1, followed by Dublin, Madrid, Hamburg and, in a remarkable revival, Athens. Dublin’s rank-ing and Athens’ rise reflect the opportunistic streak that runs through Europe. Madrid’s ranking, too, reflects a capital surge into Spain that started in 2013 and shows no sign of eas-ing up. If anything, there are signs of it spread-ing across Southern Europe.

Of the mainstream sectors, logistics is most popular, largely due to the impact of e-commerce. City centre offices are not far behind, but suburban offices and business parks languish near the bottom of the league; only a third of respondents rate their invest-ment prospects as good. Housing is an increas-ingly important part of the mix. Two thirds of respondents are involved in residential in some shape or form and this year Emerging Trends in Real Estate: Europe has taken a closer look at the sector. It is evident that shortages and affordability issues in many European cities are influencing a longer term move into hous-

ing by some investors and advisers that had once stuck resolutely to commercial real estate.

The green agenda is also embedded as a long-term strategy for many respondents, but regula-tions and rapidly approaching energy efficiency targets have brought it into sharp focus. Regard-less of the red tape, Emerging Trends in Real Estate: Europe finds many convinced that sustain-ability is synonymous with good business.

{MONE

ing by some investors and advisers that had

EUROPEAN PROPERTY Still OVERPRICED

ATHE FIVE LEADING CITIES FOR INVESTMENT PROSPECTS IN 2015 ARE BERLIN, DUBLIN,

MADRID, HAMBURG AND, IN A REMARKABLE

REVIVAL, ATHENS

LEAN AUDITING: DRIVING ADDED VALUE AND EFFICIENCY IN INTERNAL AUDITBY JAMES C. PATERSON (JOHN WILEY & SONS, 2015)

R.R.P. £29.99 (£20.39 FROM AMAZON.CO.UK)

his practical guide to maximising

interested in understanding what progressive, value adding audit can be like

activities can be streamlined or better co-ordinated with other activities. Paterson demonstrates the counterintuitive concept that if the internal audit process continues

controls and compliance work, it can often weaken and perpetuate a range of organisational and cultural problems

presented here, internal auditors will have

audit plans, reports, and approaches

the value of their work, whilst minimizing

taking a lean approach to the audit plan can ensure that internal audit examines the right areas, overcoming the common failing of having a disconnect between the audit plan and the most important risks and value drivers.

LEANAUDITINGAA DRIVING

BOOK REVIEW

real estate


technology

{BUSINESS}

BUSINESSTHE GEN Z EFFECT: THE SIX FORCES SHAPING THE

FUTURE OF BUSINESS

BY TOM KOULOPOULOS & DAN KELDSEN

(BIBLIOMOTION, 2014) R.R.P. £19.99

(£16.72 FROM AMAZON.CO.UK)

One of the most profound changes in business and so-ciety is the emergence of the post-Millennial generation,

Gen Z. While every new generation has faced its share of disruption in technol-ogy, economics, politics and society, no other generation in the history of mankind has had the ability to connect every human being on the planet to each other and in the process to provide the opportunity for each person to be fully educated, socially and economically engaged. What might this mean for busi-ness, markets, and educational institu-tions in the future? In this revolutionary new book, the authors delve into a vision of the future where disruptive invention and reinvention is the acknowledged norm, touching almost every aspect of how we work, live and play. The book provides a mind-bending view of why we will need to embrace Gen Z as the last, best hope for taking on the world’s big-gest challenges and opportunities, and how you can prepare yourself and your business for the greatest era of disrup-tion, prosperity, and progress the world has ever experienced.

BUSINESS

BOOK REVIEW

One billion new smart-phones will be pur-chased as upgrades in 2015, generating over $300 billion in sales, according to Deloitte’s

2015 TMT (Technology, Media and Tele-communications) predictions. The firm expects smartphone upgrade volumes to continue in-creasing through 2018, and possibly beyond.

The quantity of smartphones bought as upgrades is unparalleled among consumer electronics devices. In 2015, smartphone sales will be greater in units and revenues than the PC, television, tablet and games console sectors combined. The smartphone’s share of units and revenue should continue growing through 2018.

The smartphone’s predominance is driven mainly by upgrades and the smartphone base is forecast to increase from 1.8 billion in 2014 to 2.2 billion this year. Deloitte expects smart-phone sales of about 1.4 billion in 2015, which implies that just over a billion (about three-quarters) of them will be upgrades. According to Deloitte’s research, undertaken in May-June 2014, about seven in ten smartphone owners in 14 developed markets had upgraded their phone in the previous 18 months. This is more frequent than for any other consumer electron-ics device, which may surprise in view of the fact that in 2015 most smartphone owners are likely to spend more time looking at TV screens, and information workers and stu-dents may spend more time looking at PC screens.

However, the smartphone is the most personal of consumer electronics devices: the most constant companion, the most personal of choices, the most customized and reflective of the owners, the least likely

to be shared with other users, and the most frequently looked at.

Indeed, Deloitte’s research found that respondents in many countries chose the smartphone as the device they were most

likely to purchase in the next 12 months, with a third expecting to buy a smart-phone, compared to 21% for laptops and 19% for tablets.

The huge production volumes of smart-phones manufactured also make this the most competitive market among devices, undergo-ing the most substantive improvement on a year-by-year basis. Deloitte’s view is that the device replacement cycle for smartphones is the shortest relative to other devices.

Some may question the need for users to swap one small, rectangular and expensive slab for another. Arguably there is little perceptible benefit in upgrading from a quad-core to an octa-core device; 3G is good enough and 4G unnecessary; there is little noticeable difference between a 12 MP (mega-pixel) and 20MP photo, or between a high definition and 4K screen; wide-angle lenses that take better selfies aren’t needed..

Assessing the smartphone upgrade market from a purely technical perspective, it might be concluded that most existing owners do not ‘need’ a new device. But this assessment is too narrow; there is a wide spread of motivations, practical and emotional, which will drive the billion upgrades anticipated for 2015 and the 1.15 billion for 2016.

Upgrading a smartphone on the basis of looks may seem superficial, but this decision can also be rationalized. Better-quality materi-als – whether metals, plastics or even bamboo – are now being used, and these can make devices more durable as well as more eye-catching. New screens tend to be stronger, and also to have better viewing angles, as well as su-perior visibility in sunlight. Many smartphone models are now dust- and water-resistant.

Peer pressure is likely to be a factor in many decisions to upgrade. It’s not just the envy invoked from seeing friends and family with pristine new devices, replete with brand new functionality; it’s also the news flow, with some new smartphone launches dominating the tech sections of websites and also national news bulletins.

The decision to actually upgrade a phone, and the choice of which model to upgrade

to, will likely have been driven by many of the aforementioned factors, as well as

many other impulses. Vendors and carriers should be aware of them all.

Smartphone UPGRADES TO GENERATE $300 BILLION IN 2015 SALES

DELOITTE PREDICTS PURCHASES OF ONE BILLION UNITS

PEER PRESSURE IS LIKELY TO BE A FACTOR IN MANY DECISIONS TO UPGRADE


Fewer CEOs than last year think that global economic growth will im-prove over the next 12 months, though confidence in their ability to achieve revenue growth in their own compa-nies remains stable,

say the more than 1,300 CEOs interviewed in PwC’s 18th Annual Global CEO Survey. Results of the survey were released last month at the opening of the World Economic Forum Annual Meeting in Davos, Switzerland.CEOs are less optimistic about global growth prospects than a year ago, with 37% of them thinking that global economic growth will improve in 2015. This is down from 44% last year. Significantly, 17% of CEOs believe that global economic growth will decline, more than twice as many as a year ago (7%). The remaining 44% expect economic conditions to remain steady.

Regionally, the results show wide variations. CEOs in Asia Pacific are the most optimistic about the global economy with 45% anticipating improvement, followed by the Middle East (44%) and North America (37%). On the other hand, only 16% of CEOs in Central and Eastern Europe expect economic improvement. CEOs in emerging economies like India (59%), China (46%) and Mexico (42%) are more optimistic about the economy than those in developed economies like the US (29%) and Germany (33%).

REVENUE GROWTHDespite the overall declining outlook for the global economy, CEOs remain confident

growth

WHILE SOME MATURE MARKETS

LIKE THE US APPEAR TO BE REBOUNDING,

OTHERS LIKE THE EUROZONE CONTINUE TO

STRUGGLE.

CEOs LESS OPTIMISTIC ABOUT THEGlobal Economy

about prospects for their own company; 39% worldwide said they are ‘very confident’ their company’s revenues will grow in the next 12 months. That’s the same as last year; though up slightly from 36% in 2013.CEOs in the Asia Pacific region (45%) are most confident of revenue growth, about the same as last year. The Middle East is still one of the most optimistic regions with 44% of CEOs very confident of revenue growth, although this is down markedly from last year’s 69%. CEO confidence in growth is higher in North America, rising to 43% from 33%. CEOs in Western Europe (31%) and Central and Eastern Europe (30%) are least optimistic about their company’s growth prospects.

Looking country by country, India’s CEOs top the list, with 62% very confident in their short-term growth prospects. Other leading countries include Mexico (50%), the US (46%), Australia (43%) the UK and South Africa (39%), China (36%), Germany (35%) and Brazil (30%). Among the least confident countries are France (23%), Venezuela (22%), Italy (20%), Argentina (17%) and, at the bottom of the list, Russia, with only 16% of CEOs very confident of revenue growth for 2015. This is down from 53% last

year when Russia’s CEOs were the most confident in the world.

Commenting on the survey results, Dennis M. Nally, Chairman of PricewaterhouseCoopers International, says: “The world is facing significant challenges: economically, politically and socially. CEOs overall remain cautious in their near-term outlook for the worldwide economy, as well as for growth prospects for their own companies. While some mature markets like the US appear to be rebounding, others like the eurozone continue to struggle. And while some emerging economies continue to expand rapidly, others are slowing. Finding the right strategic balance to sustain growth in this changing marketplace remains a challenge. CEO confidence is down notably in oil-producing nations around the world as a result of plummeting crude oil prices. Russian CEOs, for example, were the most confident in last year’s survey, but are the least confident this year. Confidence also slipped among CEOs in the Middle East, Venezuela, and Nigeria”.

STRATEGIES FOR GROWTHCEOs rank the US as their most important market for growth over the next 12 months, placing it ahead of China for the first time since PwC started asking this question five years ago. Overall, 38% 0f CEOs say the US is among their top-three overseas growth markets, compared with 34% for China, 19% for Germany, 11% for the UK and 10 % for Brazil.CEOs say they will undertake a number of business strategies to strengthen their companies in the coming 12 months. Overall, 71% say they will cut costs, 51%

{ECONOMY}


will form strategic alliances or joint ventures, 31% will outsource a business process or function, and 29% will complete a domestic M&A (up from 23% last year).

WHAT WORRIES CEOS MOST?Over-regulation again tops the list of concerns, named by 78% of CEOs worldwide. This is up 6 points from last year and is now at the highest level ever seen in the survey. Countries where concern about over-regulation is particularly high include Argentina (98%), Venezuela (96%), the US (90%), Germany (90%), the UK (87%), and China (85%).

Other top concerns cited by CEOs are availability of key skills (73%), fiscal deficits and debt burdens (72%), geopolitical uncertainty (72%), increasing taxes (70%), cyber threats and the lack of data security (61%) - going up rapidly from 48% last year – as well as social instability (60%), shifting consumer patterns (60%) and the speed of technological change (58%).CEOs concerns are up in all areas compared to last year with the exception of energy costs where they are slightly down at 59%.

THE COMPETITIVE LANDSCAPEA third of CEOs worldwide say their company has recently entered or considered entering one or more new industries in the last three years, and more than half (56%) believe that organisations will increasingly compete in new sectors in the next three years. CEOs think a significant competitor is emerging or could emerge from the following sectors: technology (32%), retail and wholesale distribution (19%), and communications, entertainment and media (6%).

CEOs are also using joint ventures, alliances and informal collaborations to gain a competitive edge, working with suppliers (41%), customers (41%), and academia (32%). The top reasons for collaboration are access to new customers, emerging technologies, new markets and innovation.

WORKING WITH GOVERNMENTCEOs say the top priority of government should be maintaining a competitive and

EUROPEAN SPRING: WHY OUR ECONOMIES AND POLI-TICS ARE IN A MESS - AND HOW TO PUT THEM RIGHT BY PHILIPPE LEGRAIN (CB BOOKS, 2014)


B ritain and the rest of Europe are in a mess. Our economies are failing to deliver higher living standards for most people

and many have lost faith in politicians’ ability to deliver a brighter future, with support for extreme parties soaring. Are stagnation, decline and disillusionment inevitable? As a critically acclaimed author who was until recently a senior policymaker (adviser to the Director-General of the World Trade Organisation and the President of the European Commission), Philippe Legrain has a unique combination of insider knowledge, intellectual authority and independent perspective that make him ideally placed to explain why things have gone wrong – and how to put them right. In this brilliantly original and passionate book, he explains why we need a European Spring: economic and political renewal. He provides an original and insightful analysis of what has gone wrong with Europe’s economies and politics and a timely warning that the crisis ultimately threatens our open societies. Better still, he provides a blueprint for a brighter future and how to achieve it.

EUROPEAN SPR

BOOK REVIEW

efficient tax system, cited by 67% of survey respondents. But only 20% of CEOs said their country is successful in creating such a system. Likewise, access to a skilled workforce is highly valued by 60% of CEOs, but just 21% say enough skilled workers are available in their country. Other government priorities for CEOs include physical infrastructure (49%), affordable capital (29%), and digital infrastructure (28%). One notable issue, reducing the risk of climate

change, is given priority by only 6%.

THE DIGITAL AGEThe emergence of digital technology has completely changed how companies do business; 58% of CEOs are concerned about the speed of technological change compared with 47% last year. Mobile technologies are seen by 81% of CEOs as most important to their company, followed by data mining and analysis (80%), cybersecurity (78%), socially enabled business processes (61%) and cloud computing (60%). Companies get the most benefit from digital technologies in the areas of operating efficiency (88%), data and data analytics (84%) and customer experience (77%).

“CEOs know they must be adaptable to disruptive changes in technology and in their markets. They need to put technology at the core of their business to create value for customers. Finding new ways of thinking and working in this new competitive landscape is critical to success,” concludes Dennis Nally.

TALENT DIVERSITY AND ADAPTABILITYHalf of CEOs around the world say they will increase their headcount over the next 12 months, while 21% expect a decrease (this remains about the same as last year). As CEOs seek to meet the challenge of finding the right people, 81% say they are looking for a broader range of skills. Nearly two-thirds of CEOs’ organisations (64%) have a diversity and inclusiveness strategy – but nearly a third don’t. Or those who have such strategies, 85% say it has improved their bottom line.

For PwC’s 18th Annual Global CEO Survey, 1,322 interviews were conducted in 77 countries during the last quarter of 2014. By region, 459 interviews were conducted in Asia Pacific, 455 in Europe, 147 in North America, 167 in Latin America, 49 in Africa and 45 in the Middle East. The full survey report can be downloaded at www.pwc.com/ceosurvey .

OVER-REGULATION AGAIN TOPS THE LIST OF CONCERNS, NAMED BY 78% OF CEOS WORLDWIDE

Dennis Nally

PThree new Double Tax Treaties (DTTs) with Spain, Lithu-ania and Norway became effective as of 1 January 2015, offering a much needed boost to

the island’s financial and corporate services sector. All three treaties are based on the Organisation for Economic Co-operation and Development (OECD) Model Tax Convention framework with a number of modifications.

SPAINThe treaty with Spain provides for zero withholding tax on dividends provided that the recipient of the income holds directly at least 10% of the capital of the company paying the dividends (the rate is 5% in all other cases). The treaty also provides for zero withholding tax on interest and royalty payments. The capital gains tax article al-locates taxation rights to the source state for gains arising on the sale of shares in real estate rich companies (i.e. shares deriving more than 50% of their value from im-movable property) not listed on the stock exchanges of Spain or Cyprus.

LITHUANIAThe treaty with Lithuania provides for zero withholding tax on dividends where the beneficial owner is a company (other than partnership) which holds directly at least 10% of capital of the dividend pay-ing company (5% withholding tax is levied in all other cases). It also provides for zero withholding tax on interest and 5% with-holding tax on royalty payments. Capital

{TAX&LEGAL}

gains derived by a resident of Cyprus or Lithuania are not

taxable in the country of invest-ment (except gains relating to immovable property and gains from the alienation of movable property of a permanent establishment). In par-ticular, any gains arising from the sale of shares will only be taxed in the country of residence of the seller of the shares.

NORWAYThe treaty with Norway replaces the 1955 United Kingdom-Norway agreement, which was an extension of the 1951 treaty between the UK and Norway, which in turn applied to certain British colonies, including Cyprus. The new treaty provides for zero withholding tax on dividends where the beneficial owner is a company (other than partnership) which holds di-rectly at least 10% of the dividend paying company (15% withholding tax is levied in all other cases). However, no withholding tax is levied on dividends derived by and beneficially owned by the government of a contracting state.

The treaty also provides for zero with-holding tax on interest and royalty pay-ments.

Capital gains derived by a resident of Cyprus or Norway are not taxable in the country of investment (except gains relat-ing to immovable property, gains from the alienation of movable property of a per-manent establishment and gains from the alienation of containers used for transport solely between places within the source


taxation

state). In particular, any gains arising from the sale of shares will only be taxed in the country of residence of the seller of the shares.

Meanwhile, three more DDTs signed with Switzerland, Guernsey and Ice-land are now pending ratification. In another development last year, Ukraine abolished its double-taxation avoidance treaty with Cyprus with the country’s Prime Minister, Arseniy Yatseniuk, say-ing that the country was losing about $300 million a year to tax-free invest-ments in Cyprus. However, the govern-ment in Kiev said it would immediately start negotiations with Cyprus on a new treaty, and last month Ukraine’s Am-bassador to Cyprus, Borys Humeniuk expressed his hopes to Gold that the issue will soon be resolved.

Cyprus currently has Double Tax Treaties in force with 52 countries.

CYPRUS CURRENTLY HAS DOUBLE TAX TREATIES IN

FORCE WITH 52 COUNTRIES

NEW YEAR SEES THREE MORE DOUBLE TAX TREATIES DOUBLE TAX TREATIES DOUBLE TAX TREATIES


{TAX&LEGAL}

CYPRUS FORMALLY REMOVED

FROM SPAIN’S TAX HAVEN BLACKLIST

tax news

Αccording to a report issued by the General Directorate for Taxes of the Spanish Ministry of Finance (Treasury Office - Ministerio de Hacienda),

following the conclusion of double taxation agreements the Ministry has substantially reduced its list of countries regarded as tax havens around the world. Following the entry into force of the double taxation agreement between Spain and Cyprus, Cyprus has now been formally removed from the list, along with 14 other territories including Andorra, Hong Kong, Singapore and United Arab Emirates. Formal removal from the blacklist removes

any doubts regarding the applicability of certain tax deductions contained in the Spanish tax regulations, which require that the relevant jurisdiction should not be regarded as a tax haven. The blacklist list now comprises: Anguilla, Antigua and Barbuda, Bahrain, Bermuda, Brunei, Cayman Islands, Cook Islands, Dominique, Fiji, Gibraltar, Grenada, Channel Islands, Jordan, Lebanon, Liberia, Liechtenstein, Macao, Malvinas Islands, Isle of Man, Marian Islands, Mauritius, Monaco, Montserrat, Nauru, Oman, Seychelles, Solomon Islands, St Lucia, St Vincent and the Grenadines, Turks and Caicos Islands, Vanuatu, British Virgin Islands and US Virgin Islands.

As expected, at its meeting on 27 January 2015 the Council of the European Union adopted a directive amending the EU parent-subsidiary directive (2011/96/EU) by adding

an anti-abuse clause aimed at preventing the parent-subsidiary directive from being misused for the purposes of tax avoidance, and achieving consistency in its application in different member states. The parent-subsidiary directive is intended to ensure that profits made by cross-border groups are not taxed twice. It requires member states to exempt from taxation profits received by parent companies from their subsidiaries in other member states.

The anti-abuse clause will allow member states to deny the benefits of the directive to so-called “artificial” arrangements – that is, arrangements that have been put into place in order to obtain a tax advantage without reflecting economic reality. It takes the form of a «de minimis» rule, allowing member states to apply stricter national rules as long as

they meet minimum EU requirements. Based on the draft published by the European Council in December 2014 the amendments made to the parent-subsidiary Directive are expected to read as follows:

«2. Member States shall not grant the benefits of this Directive to an arrangement or a series of arrangements which, having been put into place for the main purpose or one of the main purposes of obtaining a tax advantage that defeats the object or purpose of this Directive, are not genuine having regard to all relevant facts and circumstances. An arrangement may comprise more than one step or part. 3. For the purposes of paragraph 2, an arrangement or a series of arrangements shall be regarded as not genuine to the extent that they are not put into place for valid commercial reasons which reflect economic reality. 4. This Directive shall not preclude the application of domestic or agreement-based provisions required for the prevention of tax evasion, tax fraud or abuse.»

Information courtesy of Andreas Neocleous & Co LLC.info:

Member states have until 31 December 2015 to introduce an anti-abuse rule into national law. The same deadline applies for transposition of the July 2014 amendments to tackle hybrid loan mismatches.

ΑMENDMENT TO THE EUPARENT-SUBSIDIARY DIRECTIVE

MAGNA CARTA TRANSLATED BY PROF. DAVID CARPENTER

(PENGUIN CLASSICS, 2015)


“No free man shall be seized or imprisoned, or stripped of his rights or possessions, or

outlawed or exiled, or deprived of his standing in any other way, nor will we proceed with force against him, or send others to do so, except by the lawful judgment of his equals or by the law of the land.”So reads Magna Carta, issued by King John of England in 1215 and probably the most famous declaration in western legal history. It set out a series of rights and duties which have been appealed to, ignored, suppressed and argued about ever since. 2015 is the 800th anniversary of Magna Carta’s creation – an event which will be marked with exhibitions, commemorations and debates in all the countries over whose constitutions and legal assumptions the shadow of Magna Carta hangs. Prof. David Carpenter has translated the text and written the extensive commentary on the document that makes up the book’s several hundred pages (the text of the famous document covers only 30) and it is a fascinating study.

MAGNA CA AC RTAT

BOOK REVIEW

investing in cigars

{LIFESTYLE}


MY FIRE

Light By Chloe Panayides


Renowned for their addictive nature, ciga-rettes were famously used by imperialist nations in subduing their colonies’ popu-lations, creating a tangible need between oppressor and oppressed.

Contrarily, cigars have reigned supreme as symbols of prestige and prowess, enjoyed by the rich and influential at the most pressing and pleasant times of their lives.

Winston Churchill was famously smok-ing a cigar when an emergency meeting was called pertaining to World War II, forcing him to stub it out mid-smoke (said cigar sold, incidentally, for £4,500 in 2010, 1,185% more than its £350 esti-mate). Meanwhile, English novelist Evelyn

Waugh immortalised the pleasure of enjoying a cigar, thus: “The most

futile and disastrous day seems well spent when it is reviewed through the

blue, fragrant smoke of a Havana cigar.”Akin to wine that matures bountifully in

aroma and taste – and, thus, monetarily – aged cigars are likewise hungrily coveted by cigar aficionados.

Pinpointing the origin of the cigar has long eluded historians, with uncertainty shrouding the where and when of its incep-tion.

In April 2012, whilst examining mineral samples at a Ch’orti’ Maya cave site, a team of Tampa University scientists unearthed a large cache of 828 cigars in southeast Gua-temala believed to be at least 600 years old, alongside a ceramic pot depicting a Mayan puffing on tobacco leaves bound with string. In fact, etymologists suggest that there is a tenable link between the Mayan word sikar – meaning to smoke – and the contemporary word denotative of the cigar.

The tradition was obviously not ex-clusively Mayan, nor geographically con-tained: when Italian explorer Christopher Columbus stumbled upon what we now call the Americas in 1492, in the Bahamas archipelago he found natives of this still unexplored land smoking cylindrical bun-dles of tightly-rolled dried and fermented tobacco leaves. Wasting no time, Colum-bus duly disseminated tobacco to the rest of the world, with the Spanish most notably picking up the reigns of this nascent indus-try, holding the monopoly until 1817.

By this time, cigars had exploded in pop-ularity worldwide, with the US alone being credited as having consumed some 300 million cigars by the mid-19th century.

In delineating a history of cigars, Alex Altman writing for Time notes that since cigars’ commercial inception, Cuba’s fertile land and favourable climate allowed for all three types of tobacco leaves used in cigars – wrapper, filler, and binder – to be grown and harvested on the island, thus elevating

SIGMUND FREUD BELIEVED THAT SMOKING THEM ENHANCED HIS CAPACITY TO WORK; JOHN F. KENNEDY FAMOUSLY BOUGHT 1,000 OF THEM IN ONE DAY PRIOR TO SIGNING A TRADE EMBARGO WITH CUBA; AND KING EDWARD VII’S PENCHANT FOR THEM RESULTED IN HIM – UPON ASSUMING THE BRITISH THRONE IN 1901 – AN-NOUNCING A BREAK WITH THE SMOKE-FREE POLICIES OF HIS MOTHER, QUEEN VICTORIA, BY UTTERING THE NOW FAMOUS WORDS: “GENTLEMEN, YOU MAY SMOKE.” YES, CIGARS HAVE LONG ENTHRALLED THE RICH AND POW-ERFUL THE WORLD OVER, AND NOW, AS COV-ETED BRANDS’ SIGNATURE OUTPUT BECOMES MORE AND MORE SCARCE, ANOTHER INVEST-MENT FIRE IS BEING LIT.

SIGMUND FRERRTHEM ENHANJOHN F. KENNTHEM IN ONEEMBARGO WITPENCHANT FOASSUMING THNOUNCING APOLICIES OF HBY UTTERING“GENTLEMEN,HAVAA E LONG ENERFUL THE WOETED BRARR NDSMORERR AND MOMENT FIRERR IS B

CIGAR AFICIONADOS THE WORLD OVER ARE REJOICING AS THEY WITNESS AMERICA’S ICY RELATIONS WITH CUBA

THAWING AND MANY ARE WONDERING WHAT THIS WILL MEAN FOR THE BURNING CIGAR INVESTMENT FIRE


investing in cigars

Cuban cigar-makers upon the industry’s pedestal, a position they still maintain to-day.

Indeed, the industry has grown to a con-jectured 20 billion cigars bought worldwide per year, with many increasingly uttering the words ‘cigars’, ‘wine’, and ‘art’ in the same breath as viable alternative invest-ments.

Mitchell Orchant, Managing Director at specialist cigar merchant C.Gars, believes that the market for premium cigars is worth billions of pounds. Whilst it has long been dominated by the US and Europe, the rise of new wealth in Asia – most notably, China – is spurring the industry profitably forward. According to Interactive Investor, the Chinese are estimated to be spending on average some $335 million a year on cigars; a figure that is growing year-on-year.

David Dale, Head of Wealth Manage-

ment at Dickinson Dees, explains that be-sides the enjoyment wrought from smoking them, cigars have accrued a commendable degree of sentimentality in the east, with many citizens of Hong Kong in particular being known to pass coveted cigars down from generation to generation in creating a collection. “It is not unusual for an aficio-nado to possess more than 100,000 cigars,” Dale explains.

Talking to Advisor, Joe Taylor of Paul Fraser Collectibles concurs with Dale’s sentiment, noting that shifting wealth patterns are changing the collecting game, with the world’s largest cigar auctions now taking place in Hong Kong. “China’s newly established middle class is exploring unconventional ways to spend money,” he says. “This is a promising time for those looking to invest in cigars, as the amount of interest is likely to increase in the com-

ing years.”Indicating cigars’ overall growing

fecundity, Paul Fraser Collectables notes that boxes of mid-1980s Davidoff

Dom Perignon cigars, originally bought for less that £300, are now commanding approximately £6,000. The UK-based company also credits the sale of hand-rolled Cuban cigars as growing by 10% year-on-year.

Still, in ensuring that one’s hobby retains value, industry experts are unanimous in recommending that collectors don’t deviate

1. MAYAN CIGARS: $507,000

Unearthed in Guatemala in 2012, this cache of cigars is thought to be at least 600

consumption. The entire col-lection made its way to auc-tion, where it was duly sold to tobacco collector Gary Liotta for a commendable $507,000.

2. GRAN HABANO

EL GIGANTE: $185,000Created as a display item rather than an actual cigar, the 19-foot long and 3-foot wide giant tobacco roll caught the

eye of a private tobacco enthu-siast who parted with $185,000 to acquire it. Crafted using 1,600 pounds of tobacco leaves, the whole cigar is the equivalent of almost 25,000 regular sized cigars.

3. DOUBLE CORONA REGIUS CIGARS LTD:

$54,000 FOR 1 CIGARThis solitary stick, a special edition of the Double Corona cigar, is rarity in-carnate. It sold to businessman Cal-lum Jones in 2013 for $54,000.

4. GURKHA BLACK DRAGON: $115,000

PER BOX

across the globe and rolled in Hon-duras, the Gurkha Black Dragon’s name is renowned worldwide amongst cigar enthusiasts. This cigar – described

edition hand-carved camel bone boxes, with 100 cigars in each box. Individually, this cigar is priced at $1,150.

5. ARTURO FUENTE OPUS X LTD: $30,000

PER BOXReleased in 2003 as part of the 10th an-niversary celebra-tion of the original Opus X, the Arturo Fuente Tobacco Company produced 100 Forbidden X humidors (50 with a red madrona veneer, 40 with yellow eye ma-ple and 10 with macassar). Each humidor contains 100 Opus X cigars.

MONEY TO BURN A LOOK AT THE FIVE MOST EXPENSIVE CIGARS IN THE MARKET(Source: Finances Online)

IT IS NOT UNUSUAL FOR AN AFICIONADO TO POSSESS MORE THAN

100,000 CIGARS


US BY DAVID NICHOLLS (HODDER & STOUGHTON,

2014)


If you enjoyed David Nicholls’ hugely successful third book One Day, you will already be well-disposed to his latest bit-tersweet novel about love and

family, husbands and wives, parents and children. Longlisted for the Man Booker Prize for Fiction 2014, it doesn’t need the ‘gimmick’ of each chapter taking place on the same day

for it. Douglas Petersen understands his wife’s need to ‘rediscover herself’ now that their son is leaving home but whereas he thought they’d be doing their rediscovering together, Connie announces that she will be leaving too. He resolves to make their last family holiday into the trip of a lifetime: one that will draw the three of them closer, win the respect of his son and make his wife fall in love with him all over again. Nicholls artfully unveils 25 years of a couple’s relationship, weaving the past and present to create an intricate whole, one that is at times deceptively light and unexpectedly devastating, funny and moving.

BOOK REVIEW

The Cyprus Connection

from the brands they know and rec-ognise with established reputations for quality. Cuban Davidoff, Dunhill, Co-hiba, Montecristos, Romeo y Julieta, and Partagas are examples of brands revered for their quality and staying power.

Attesting to this caveat is the much-talked-about sale in 2010 that saw a box of 10 Romeo y Julieta cigars sell for £11,500, far exceeding its £2,225 esti-mate. More impressively still, the box had originally been purchased for £70.

Proving that this instance was by no means an anomaly in the sea of cigar sales, avid cigar enthusiast and investment banker with ING in the City of London, Gordon Johns, described his experience of investing in cigars in the Financial Times where he explained: “One of my best investments was in the discontinued Cu-ban Davidoffs from the 1970s and early 1980s. I paid £1,000 per box of 25 back in the late 1990s. They are now worth four or five times that.”

Johns credits this increase to the fallible nature of cigars: “As they are gradually bought up by cigar connoisseurs and go up in smoke, as it were, there are fewer and fewer in existence, so naturally they’ve appreciated enormously.”

Johns has succeeded in accumulating some 20 boxes of cigars, one of which he sells every year, always, he notes, making

a decent profit. “If the value has not gone up, I just smoke them!” he adds playfully.

A win-win situation by any cigar afi-cionado’s standard.

Of course, those who don’t sell

– or smoke – their investment must be sure of safeguarding it. With cigars, this comes in the form of ensuring that proper storage conditions are adhered to. Cigars are notorious for drying out quickly and easily: in less than two weeks of not being properly kept, cigars not only lose all fla-vour, they lose their value. A humidor is vital in maintaining a cigar’s worth: a box or room with a specific and consistent temperature humidity level. Ideally, cigars should be stored at 65-70% humidity, never exceeding 24 degrees Celsius.

And when cigars are adequately stored and aged, the outcome is, as Johns ex-plains, inspiring: “While non-aged cigars have vitality and rawness and a huge bang of flavour,” he notes, “the mature ones are wonderfully mellow and subtle. It’s a

THE INDUSTRY HAS GROWN TO A CONJECTURED 20

BILLION CIGARS BOUGHT WORLDWIDE PER YEAR

different smoking experience altogether – quite sublime.”

Considering Johns’ enthusiastic hyper-bole, perhaps it is no wonder that cigar aficionados the world over are rejoicing as they witness America’s icy relations with Cuba thawing – with bids to restore ties severed in 1961 underway – and many are wondering what this will mean for the burning cigar investment fire. P

erhaps sur-prisingly, only two operators worldwide possess the

distribution rights for Cuban cigars; more sur-prising still is that one of these companies is head-quartered in Limassol, Cyprus.

Since 2005, Phoenicia T.A.A. (Cyprus) Ltd. has been distributing Cuban cigars to the world, con-trolling more than 56

countries across Europe, Africa, the Gulf region, and the Middle East straight from its Cyprus-based office, which is manned by 15 people in a bid to satisfy the demands of the market.

Phoenicia closely col-laborates with Habanos SA, the arm of the Cuban state tobacco company Cubatabaco, which con-trols the promotion and export of Cuban cigars.

Habanos S.A. owns the

trademarks of every brand of Cuban-made cigars and cigarettes in the countries they are exported to and franchises the La Casa del Habano chain of cigar stores to put consumers in touch with what they desire. In Cyprus alone, there are four La Casa del Habano stores, in Nico-sia, Limassol, Paphos, and Larnaca respectively, with the official dealer regis-tered as Phoenicia Fereos Cyprus Ltd.

don’t see any negative aspects to my job. It’s great!

I also have quite a lot of freedom to enjoy my time away from the office. I really love music and I have a huge collection of music includ-ing around 60,000 songs in digital form and more on vinyl. In my view the best music was made at the end of the ‘60s and in the early ‘70s. The Beatles were the best band ever but I love Crosby, Stills, Nash & Young and one of my favourite albums last year was the Live 1974 box set. I still try to explore new music and when I saw Paulo Sor-rentino’s movie The Great Beauty (La Grande Bellezza), I really fell for the soundtrack. It is visually incred-ible too and anyone reading this should see it!

I read a lot, and right now I’m reading Abducting a General: The Kreipe Operation and SOE in Crete by Patrick Leigh Fermor, all about the kidnapping of General Kreipe, the German commander in Crete in 1944. It’s a great story and, in fact, I find the period of the Second World War fascinating. Antony Beevor’s D-Day: The Battle for Nor-mandy also impressed me a lot.

I think I’ve probably seen more of Cyprus than the average Cypriot over the last two years. I regularly get into my car and go exploring the island. There’s a lot of variety and a lot of great beauty here. My contract has just been renewed for another two years so I’ll be here for some time yet. I really feel that they world is at my feet at this moment in time. I like being here. After that, who knows?”


in Nico-sia for almost two years now. My wife and four children are in Am-sterdam and although we used to travel around as a family, when the kids reached secondary school age they needed a firm base so I go home every two weekends and they visit here once in a while too. It works for us! I wake up around 6am and I like to take my time over my breakfast of fruit and yoghurt. I get to the office around 7-7.30am and the morning ‘ritual’ involves having two coffees and checking the main news web-sites before anything else. My first meetings start around 8.30am. When I started, I had to take care of a lot of operational issues, restructuring and making things more efficient. That’s now been done and I’m very confident that my team can take care of things so, as CEO, most of my time is devoted to strategy issues. MTN is not just a mobile operator anymore – it’s much more – and so we need to be on the lookout for new revenue streams. ICT is a €150 million market in Cyprus alone, so that’s one area we have decided to move into. Telecom-munications is such a dynamic industry. The technologies we have now may have completely changed in six months. In this sense there is something new and different happening every day and I like this.

As a kid I didn’t really know

Philip van Dalsen

what I wanted to do – I was more into playing guitar! – but my par-ents told me that I should study something that would give me a broad choice of career afterwards and in the end I chose law which teaches you to analyse and is a very good foundation for lots of things later.

After graduating from Leiden University, I was offered an in-ternship with the Dutch bank ING which had set up a branch in Vietnam and I stayed there for two years. Vietnam was just open-ing up to foreign investment and a lot of companies were asking for advice about how to go about it but the bank didn’t really have time for this, so I decided that I could do it myself. I left the bank and, with a good friend of mine, set up a consultancy and market research business. I then worked for a major exhibition organiser in Amsterdam before joining the Finnish telecom Sonera, which was my first connection with telecommunications. When the firm was later bought by Tiscali, I went with Celtel to the Demo-cratic Republic of Congo and then with Digitel to Suriname and the southern Caribbean, before coming to Cyprus. I have always found living abroad so much more challenging. Working in a different culture and a new environment brings out the best in me. I love being here and I enjoy the freedom I have as CEO

to decide with my team what we’re going to do. I believe in my people and so I may formulate the vision but they work out how to implement it. There is a Dutch proverb that says “Tall trees catch much wind” and, of course, as CEO I’m ultimately responsible for any failures as well as successes. I have to take criticism as well as praise but I can deal with that so I

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