Daily Press Review - 20/09/2019

In the press today:

They chose Cypriot headquarters

A number of companies, not of Cypriot interests, have chosen to move their headquarters to Cyprus, taking advantage of the favourable tax regime, its geographical position and possibly the temperate climate. Tech companies operating in different industries have set up their headquarters in Limassol but also Nicosia. The site lists Mind Geek, Hammy Media (Xhamster), Amdocs, 3CX60, eToro and Wargaming. According to the site: “Wargaming entered our lives with an online game that is loved by millions of e-athletes across the planet: the World of Tanks, World of Warplanes and World of Warships trilogy. The favourable tax regime, the geographical position and climate conditions are the main reasons why the gaming company Wargaming decided to move its headquarters to cyprus; a decision that according to the company’s founders has contributed positively towards its growth. Wargaming owns a building on Demosthenis Severis Avenue.

Tension and accusations of a “show of populism” at the Audit Committee

In addition to the above, the majority of local media focuses instead on the statements by Finance Minister Harris Georgiades, adding that the minister agreed with a statement by the representative of the Union of Cyprus Communities, that “if we want to have branches as far away as Kampos tis Tsakistras, the Co-op must be revived”. He also agreed with a statement by DISY MP Marios Mavrides that the state has the ability to support the operation of bank branches, adding however that there was no way this could ever be approved by the European Commission’s DG for Competition. Referring to the Parliament’s initative to re-establish the Co-op, Georgiades said that the Co-op could set up offices in the rural areas; however, he added that the government does not have the right to feed capital into the banks, “therefore, the executive power cannot re-establish the Co-op”. The site also reports on a heated argument that broke out between Georgiades and Green Party MP Yiorgos Perdikes, when the latter criticised the minister, claiming that he ignored letters he had sent him to express concern over the closure of branches. Perdikes used a vulgar expression to describe how the minister had ignored him, prompting Georgiades in turn to accuse Perdikes of putting on a “show of populism”, which could have no impact over the government.

“We were begging them to leave us an ATM. This is what we have resorted to”

On the topic above, the site reports that representatives of communities such as Dromolaxia, Meneou, Acheritou, Pelendri and Kampos were present at the parliamentary meeting. The community leader of Pelendri told the Finance Minister: “We were begging them (Hellenic) to leave us an ATM. This is what we have resorted to”

Harris: I am not standing down because of the Co-op

At the above parliamentary meeting about the Co-op-Hellenic Bank deal and closure of branches, Finance Minister Harris Georgiades stated that he was not standing down from his post because of the Co-op. “I am standing down because I had told the President of the Republic, in 2018, when he was insisting on re-appointing me, that I was willing to serve for another short period of time. Therefore, I am leaving for other reasons,” said Georgiades.

Debt to fall below 100%

The Finance Ministry expressed optimism that public debt will start to fall below 100% from this year, in its memo to the Cabinet that accompanied the 2020 state budget, adding that after repaying Russia, the state will also be in a position to repay its IMF loan next year. In 2018, public debt increased following the issuing of debt to facilitate the merger of the “good” Co-op and Hellenic Bank. In real terms, public debt at the end of 2018 totalled €21.3b, compared with €18.8b at end-2017. The main source of financing came from the international EMTN bond, worth €1.5b. Local bonds worth €3.19b were also issued as part of the Co-op sale. Among the year’s significant payments are the first instalments of the Russian loan and the repayment of loans to Hellenic Bank and the Central Bank of Cyprus. Based on the ministry’s estimations, the public debt will start to follow a downward trend to reach 89.1% of GDP by end-2020 and 83% by end-2021, while in 2022 it is expected to shrink further to 77.5% of GDP.

NPLs stable at €10.1b

Non-performing loans (NPLs) in the Cypriot banking system remain stable at €10.1b, marking slight progress compared with the end of 2018. According to data released by the Central Bank, NPLs in April 2019 totalled €10.1b, remaining unchanged compared with the previous month. Even though there was a significant decrease in 2018, when NPLs dropped from €20.5b at end-2017 to €10.2b, the progress this year has been minimal. The massive decrease of NPLs in 2018 was achieved because of the sale of the Co-op, as well as a large package of loans by Bank of Cyprus totalling €2.8b and the removal of €400m’s worth from the banking system by Alpha Bank Cyprus. The reduction is expected to be kickstarted again with two large sales of loan packages which are expected by Bank of Cyprus and Hellenic, as well as the implementation of the Estia scheme.

NPLs up… Delays in instalments

On the topic above, Haravgi reports that more than one in two NPLs at the banks are at immediate risk of foreclosures, as they are not covered by a restructuring plan. The situation was exacerbated over the past few months, due to the delay in implementing Estia, as NPLs as well as loans with delays of over 90 days have increased. According to the stats, total loans in the Cypriot banking system reached €32.95b in April, compared with €33.11b the previous month, recording a reduction of €164.6m. Despite this, NPLs increased marginally by €29,000 to €10.14b, while the loans with delays of over 90 days increased by €56.5m to reach €7.99b. The latter loans increased for the fourth consecutive month; something the paper says appears to be directly connected to the delay in implementing Estia.

Giant provisions worth many billions of euros

Huge provisions have been made in the Cypriot banking system for problematic loans since 2014. The policy of provisions in order to cover sins of the past has cost the banks and shareholders many millions in lost profits. The practice is considered necessary however, while new bad debts are still being created and the degree of restructurings remains lower than desired. According to the Central Bank’s data, total accumulated provisions at the end of 2014 totalled €8.97b, increasing to €10b in 2015 and then dropping to €9.84b in 2016. In 2017 they totalled €9.62b and 2018 they were €5.26b. On 30 April 2019, the provisions for bad loans in the banking system totalled €5.29b.

Exclusive: We reveal the stakes in the Nicosia Mall deal!

InBusinessNews has revealed the stakes held by the five new shareholders of the Nicosia Mall, following the deal that was reached with Bank of Cyprus. According to the site’s sources, the biggest share of the 64% stake that is being sold by Bank of Cyprus for €96m will go to the Voici La Mode Group, while the smallest share will go to the Athienitis Supermarkets Group. The new shareholder structure is: Athienitis Contractors 36% (maintains stake from before deal); Voici La Mode 18%; Zorbas Bakeries 15%; Stelios Amerikanos 15%; PHC Franchise 10%; and Athienitis Supermarkets 6%.

IDEA goes to Israel

IDEAcy (Innovate Develop Excel Accomplish), with the support of Bank of Cyprus, has sent 10 Cypriot start-up businesses to Israel for the third consecutive year, to visit innovation centres and participate in the DLD Innovation Conference, representing the Republic of Cyprus.

63,000 companies blocked

An issue has arisen with 63,000 inactive companies that the Registrar of Companies wants to strike off. While the Registrar of Companies is making an effort to clear its register of inactive companies, the Tax Commissioner is not allowing them to be struck off as they owe unpaid taxes. This has created a deadlock. With the assessment of the Global Forum on Transparency and Exchange of Information for Tax Purposes expected in a month and a half, and Cyprus’ effort to clear its reputation internationally when it comes to money laundering, the two government departments are in a race against time to resolve the issue.

PASYXE Paphos worry over Brexit

PASYXE Paphos has expressed their concern over Brexit. The Association’s President Thanos Michaelides, told CNA that they expect to see whether there will be a no-deal Brexit while stressing the importance of the sterling’s exchange rate against the euro. He added that they are awaiting a possible drop in the market, and its longevity will indicate whether Brexit is under control. He continued that parity will recover the sterling against the euro and that will have positive effects. According to Mr. Michaelides, as we approach January, we will get an idea about the next summer period as holiday bookings will begin.

A magnet for ocean lovers

Yesterday, Paphos welcomed another attraction for both locals and tourists – an initiative proposed by ETAP (Company of Tourism Development & Promotion of Paphos District). This project consists of 50 seashell sculptures in 15 compositions created by artist Yiota Ioannidou. These sculptures are glued on concrete (which is made of environmentally-friendly ingredients) weighing around 400kgs, to prevent them from moving easily. Cydive, the centre of tourist diving aided in the instalment of the project  which consists of 3 oversized sculptural  seashell arrangements placed at 3 different points of the seabed. Each composition is comprised of various  seashells, while there is a smaller composition on the outside of the sea, preparing the visitor for the surprise to come.

Michael: Cyprus is a strategic choice for investors

Cyprus is gaining increased momentum as a first choice for foreign investors who wish to find a suitable location to establish international or regional headquarters, the head of the Cyprus Investment Promotion Agency (Invest Cyprus), Michalis Michael said addressing The Cyprus Headquartering and Funds Summit which is taking place in Mumbai, India. “Offering stability, strong protection to investors and a balanced, varied portfolio of products, our small but dynamic country is already a hub for international business activities,” he said. “It is ahead of its competitors in the sector of innovation and infrastructure, while it has a very specialised and multilingual work force. With a strong economy, placing it among the top executives of the EU for five consecutive years, Cyprus has further reinforced its business climate, its healthy regulation and its particularly attractive tax regime, introducing a series of general and sector-specific incentives.” Michael also referred to the enviable quality of life that Cyprus has to offer, stressing how besides its sunny climate and natural beauty all year around, the island also offers a multinational, hospitable and safe society, making it a country that people not only want to work in but also live. The Invest Cyprus president highlighted how over the past few years, significant investments have been made in a number of financial sectors, which are significantly supported by the inflow of foreign capital. “It is worth noting the first integrated casino-resort, the only one in Europe, which was developed by the well-known Melco Resorts and Entertainment, who searched the globe and chose Cyprus to expand outside of Asia,” he said among other.

“Inappropriate and unfair” comparison between public and private earnings

Okypy described the comparison of earnings between public and private doctors as “inappropriate and unfair”, and it highlighted that fixed salaries, pension benefits, expenditures for equipment and staffing, occupational stability and many other factors should also be considered when calculating the earnings of a state doctor. Okypy announced that doctors fleeing the public sector to join GHS, remains a huge challenge but efforts are being made to provide financial and other occupational incentives so as to ensure adequate staffing and re-evaluate on 31 December 2019.

Kidney patients at risk

A large group of kidney patients in Limassol are complaining about the seemingly never-ending negligence displayed by the Ministry of Health and other state bodies, as it deteriorates their situation further and they are left suffering, while even their lives are at risk. AKEL MP Giorgos Georgiou, reports the negligence of the MoH, highlighting that the unit is operating on a voluntary basis over the last few months, and stresses the need for immediate action as the issue of staff shortages is continuously perpetuated.

Cyprus joins the fight against Alzheimer’s

According to international statistical data, Alzheimer’s affects 5% of individuals over the age of 65, and 20% over the age of 80. Alzheimer’s disease is a progressive brain disorder and the continuous deterioration of normal memory functioning is the main and initial symptom. 50% of dementia incidents – characterised by disturbances in brain and behaviour functioning – can be attributed to Alzheimer’s. 21 September was defined as the World’s Alzheimer’s Day, in an attempt to raise awareness about the disorder. The international science community is carrying out research aiming to identify its pathophysiology so as to create an efficient therapy. The Cyprus Institute of Neurology and Genetics joins this effort with its own research programmes.