Daily News Review - 01/02/2019

In today’s press:

Unfinished business

Hellenic Bank expressed its concern over negotiations with union ETYK for the collective agreements, in its economic bulletin on the share capital increase. The bulletin details the differences between the union and bank, with the latter saying it has a human resource force with many differences in both salary as well as employment terms. The bank says that it has implemented – and may continue to implement– staff rationalisation measures. It has also implemented measures to increase performance, create economic scales and centralise operations with the aim of utilising synergies and responding to clients’ needs, even though the decision to transfer 1,100 people from the former Co-op to HB is based on the strategic plan. These measures, it notes, may cause direct or indirect expenses, while they may also lead to labour disputes. It is noted that the negotiation for the collective agreements’ renewal (applicable as of 1 January 2019) is currently underway. “Assurances cannot be given that the renewal of such collective agreements will be with terms that are favourable for the Group. Following the acquisition, the risk is particularly strong, given the existence of a large number of collective agreements for the 1,100 employees that were transferred from the CCB to the Bank and the fact that said employees are represented by four different unions (SEK, PEO, PASYDY and ETYK).” The unions representing the CCB employees have already submitted a number of demands that have to do with interpretations of the collective agreements they had with the CCB, including: an increase of the employer’s contribution to the provident fund from 7% to 9% (or even 12% in some cases) as of 1 January 2019; the restoration of salaries to pre-2014 levels (there were up to 25% pay cuts at the CCB); retroactive pay of annual increments and the Cost of Living Allowance since 2014. Regarding the latter, ETYK has informed HB that there are currently six court procedures pending by employees against the CCB. Hellenic said in its bulletin that it has rejected all of these demands. The unions have declared that if their demands are not met, they will take court action. In view of the threat of legal action, the Bank has sought legal advice.

Movement for Hellenic

Increased movement of Hellenic Bank’s shares pushed the Cyprus Stock Exchange upward yesterday; though it still recorded a 5.77% loss on a monthly basis. The General Index recorded profits of 1.58% yesterday, closing on 62.92 units, while the FTSE/CySE 20 Index rose 1.62% to 37.72 units. The daily trading volume was €612,430. HB attracted the biggest investor interest, followed by Demetra Investment and Bank of Cyprus.

“Upgrades”… continue

Weekly newspaper Gnomi writes that the Moody’s “agency” recently upgraded Cyprus’ two systemic banks with the reasoning that they have boosted their capital and depositors are protected. It wonders how Bank of Cyprus was upgraded when it has been forced to issue a bond (lending), of €220m with interest of 12.25%, which is the highest ever offered by an EU bank, while in July it issued a similar bond for €250m with interest of 9.25%. As for Hellenic, the paper says what can one say? Why didn’t they wait a little longer so they could “upgrade” it by adding the dowry that was the Co-op, worth €14b, which was given as a gift. The “upgrade”, it says, is exclusively due to the Co-op assets the government gifted to HB to rescue it.

Unemployment drops 8.8% in Cyprus

Unemployment in Cyprus decreased to 8.8% (8.5% for males and 9.1% for females) in December 2018, compared to 8.9% in November 2018 and 10.3% in December 2017, according to figures published by Eurostat. In December 2018 in Cyprus 39,000 individuals were unemployed compared to 40,000 in November 2018 and 44,000 in December 2017. Meanwhile, the euro area (EA19) seasonally-adjusted unemployment rate was 7.9% in December 2018, stable compared with November 2018 and down from 8.6% in December 2017. The EU28 unemployment rate was 6.6% in December 2018, stable compared with November 2018 and down from 7.2% in December 2017.

Harris – SEK to discuss tax issues

Trade union SEK will meet with Finance Minister Harris Georgiades today. Discussions are expected to focus on the course of the economy, the state budget and the challenges ahead. Tax reform is one of the most crucial matters for both the government and the union. SEK has prepared a proposal to submit on green taxation, with suggestions on how to tax pollution and reduce labour costs.

ERC warns of derailment

The Cypriot economy is forecasted to continue to grow at robust rates in 2019, albeit at a somewhat slower pace compared to 2018, according to University of Cyprus economists. In 2018, real GDP is estimated to have increased by 3.8% while this year growth is forecasted to decelerate as Cyprus GDP is projected to grow by around 3.1%. “The main drivers of the outlook include robust activity and employment growth in the previous quarters, supportive domestic financial conditions (e.g. low lending interest rates, deleveraging, declining NPLs), and high levels of domestic economic confidence,” said UCY’s Economics Research Centre. It said the slowdown in the growth momentum projected for 2019 is mainly driven by a weaker performance of some domestic economic indicators as well as by higher uncertainty in the external environment such as global growth, international trade policies and Brexit.

Moneyval questionnaire ready

Professionals of the services sector are preparing for the arrival of Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval). Yesterday, the Unit for Combating Money Laundering (MOKAS) and Cyprus Bar Association sent relevant circulars. MOKAS said this would be Cyprus’ 5^th assessment by Moneyval, and it is made following the same methodology and questionnaire in all countries. It said the questionnaires were completed and sent to Moneyval yesterday, by all the required bodies. MOKAS said the questionnaires covered each country’s precautionary measures, as well as their strategies to combat money laundering. It concerns banks, auditors, lawyers, corporate administration companies, MOKAS, the police, the Customs Department, the Finance and Justice Ministries, and a number of other bodies. The Bar Association said it had adopted a number of measures and procedures in order to improve the level of its members’ compliance with the procedures and measures followed to combat money laundering and terrorist financing.

First the Shengen Visa, and then the passport

Cyprus will have an open line with other European countries for investors applying for Cypriot citizenship. According to Phileleftheros’ sources, the changes the government is promoting for its citizenship-by-investment scheme, in order to alleviate the European Commission’s concerns, includes a provision for the exchange of information on investors with other EU countries. According to the provision, any investor who applies for Cypriot citizenship must also attach a Shengen Visa. A competent source told the paper that the Shengen Visa will act as proof that the investor was not rejected by any other country when applying for citizenship.

Household debt drops 22%

Household debt receded to €19.8b at the end of the third quarter of 2018, with the relevant debt ratio comprising 97% of GDP, according to data released yesterday by the Central Bank. Compared with December 2016, when the debt was 119% of GDP, there has been a considerable decrease of almost 22%. Households’ assets reached €45.4b by end September 2018, of which 62% were cash and deposits, 2% securities, 20% shares and 16% other financial assets. The assets of non-financial corporations totalled €59.8b by end September, while their debt receded to €39.5b, with a debt ratio of 194% of GDP (In December 2016 the ratio was 219% of GDP).

Hydrocarbons port to use BOT method

The government’s decision to assign the project of creating a special port to service offshore hydrocarbon activities in the Zygi-Vasilikos area using the BOT method, instead of doing it itself, will lead to delays but also some radical changes to the plans so far. The proposal to change the plans so that the government does not foot the €200m bill, even though said port will be very profitable, but instead assign it to a strategic investor, was proposed by the Finance Ministry and accepted by all parties involved. However, this means there will be delays, as the terms must be prepared for a tender to select a surveyor who will assess all scenarios as well as the financial and technical aspects of building the port in the area the Republic of Cyprus purchased off the British Bases for around €10m. The port was initially designed to have a capacity to host at least two offshore hydrocarbon companies. EDT Offshore and Medwserv had shown a keen interest in the project, as they already provided such services but were facing infrastructure problems due to the concession of Limassol port with exclusive rights to the private operators.

Why is the CCCI reacting?

Weekly newspaper Gnomi writes that it was announced that tariffs at Limassol port are on the rise. One of the operating companies increased the tariffs for marine services as of 1 January 2019, while the second which operates the cargo unloading and loading services will increase its tariffs by 7.224% as of 11 February. It says the Cyprus Chamber of Commerce and Industry is up in arms about the increases; but isn’t one of the most avid supporters of privatisations? Of course, the paper says, the increases will be passed on to the consumers doubled and tripled.

PwC Cyprus focuses on developments in the shipping sector

PwC Cyprus focused on developments surrounding the shipping sector at an event that took place on 30 January in Limassol. Professionals of the sector and other stakeholders participated in the event, where they were updated by the PwC team on how things currently stand with the sector, as well as its challenges and prospects. Special reference was made to the use of technology and the changes this is expected to bring to the sector. Furthermore, participants discussed the changes to the regulatory framework but also the opportunities arising from the new state of affairs, in a bid to help the companies prepare a new strategic plan that can correspond to the challenges. The event specifically focused on the need to use technology in ships’ systems. Ship manufacturers as well as operators want to innovate, using the latest technologies and overcoming traditional solutions, in order to create ships with improved monitoring, communication and connection capabilities; ships that can be approached by isolated on-shore services, any time and any place. Addressing the event, Cleo Papadopoulou, Tax Advisory, in charge of Transportation & Logistics at PwC Cyprus, referred to how important shipping is for the Cyprus economy, contributing around 7% to the country’s Gross Domestic Product. “Cyprus is now a fully-fledged shipping centre. This is due to a number and variety of factors, such as the implementation of the right policy by the state, its quality flag, the high levels of security and services, the excellent cooperation between the public and private sector, as well as our legal and tax framework, which is perhaps the best in the European Union,” she said.

41^ST Annual Hotels convention

The Cyprus Hotels Association (PASYXE) announces that it is organising the 41^st Annual Hotels Convention that will take place on Tuesday, 26 February at Hilton Park hotel in Nicosia (between 9am-4pm). The Convention is open to both English and Greek speakers (with live interpretation), with “Value for Money from a Slogan to Word of Mouth” being its general theme. The Convention will include the following presentations: 1. Prospects and challenges of the UK Market. 2. Air connectivity strategy. 3. MELCO’s vision in taking Cyprus Tourism to new/elevated dimensions. 4. Securing our businesses by creating our own water resources. 5. Energy efficiency challenges. 6. Our vision of Cyprus Tourism and immediate priorities. The key-note speaker of the event will be Savvas Perdios, Deputy Ministry of Tourism. PASYXE thanks its official sponsors, who support the organisation of such events and exhibitions. The press release reports on the Speakers of the Convention that will include Sir Craig Ballantyne, Property President of City of Dreams Mediterranean & Cyprus Casinos. The article mentions that City of Dreams Mediterranean is the ‘gold sponsor’ of the event.

Consultants, limousines, studies and casino advisors approved

The House finance committee approved by a majority vote a number of bills it had on the table with regards to releasing funds, which included sums for the execution of co-funded projects, the purchase of services with regards to the casino-resort in Limassol, the fees of ministerial and presidential advisors and the purchase of cars for officials. The €190K envelope for the purchase of services of a project supervisor and a team of advisors that will supervise the construction of the casino-resort in Limassol was also approved. The budget line was expedited after the Deputy Minister of Tourism said its approval was urgent, since the casino-resort’s construction had already begun without any supervision. The budget line had been included in the Ministry of Commerce’s budget for 2018, but had not been used.

Release of funds

As above, the article reports on the House Finance Committee’s release of funds for the project supervisor and the team of advisors that will supervise construction of the casino-resort.

Developers meet with President following EU recommendations on passports scheme

24H reports that land developers have been alarmed following the intervention of the European Commission with regards to the passports-by-investment scheme of Cyprus. Developers met with President Anastasiades in an urgent meeting last Thursday. The chairman of the Large Investment Projects Association, Andreas Demetriades told Stockwatch, that they have not observed any difference in the market or a reduction of interest by investors. He added that the President will negotiate with the immediately affected parties, in view of the changes that the government will make to the Scheme. The Chairman of the Cyprus Land and Building Developers Association said that they will wait and see what the President will suggest and added that apart from the investments that are being completed in return for Cypriot passports, foreign investors are also expressing interest in creating malls, complex developments, hotels and casinos, among others.

Addiction prevention initiatives to be authorised by NAAC

The Cyprus National Addictions Authority has issued an announcement in order to clarify its new extended duties in the framework of a new bill that was discussed by the House Education and Culture Committee. Specifically, the Authority has said that the modernisation of the law broadens the scope of the Authority’s competence. It is defined as the highest governmental body for drafting and supervising Cyprus’ national strategy with regards to illegal substances, legal substances as well as pathological gambling. It is noted that in the framework of this law, no person or body of the private or voluntary sector can take up any measure or initiative for addiction prevention without getting an authorisation by the Authority. Interested parties can get an authorisation by completing the form on: https://www.naac.org.cy/el/emypa.

Research: Record number of foreclosures this February

24H reports that according to Brief.com.cy, a record number of foreclosures is expected to take place in February with 267 properties scheduled to be auctioned off. The value of the properties, amounts to €52.462.467. Some of the properties are residential but it is not clarified whether these are primary homes or not.

4 associations support pedestrianisation of Kostakis Pantelides street

The Technical Chamber of Cyprus (ETEK), the Nicosia Chamber of Commerce and Industry (EVEL), the Nicosia Tourism Development and Promotion Company (ETAP) and the Association of Friends of Nicosia have announced that they are supporting the pedestrianisation of the Kostakis Pantelides street in downtown Nicosia (stretching from Solomos Statue to Eleftherias Square). The present plan is to open the street to vehicles of up to 7 tonnes and this is something that the street’s shop-owners also support. ETEK thinks that the pedestrianisation of the street will contribute to limiting the use of cars in the old city, improving mobility and the quality of life in the neighbourhood.

Corruption due to fuzzy criteria on change of town-planning zones

The Auditor-General of the Republic, Odysseas Michaelides said that corruption with regards to town-planning zones is due to the fuzzy criteria and regulations that pertain to the change of town-planning zones. Michaelides was examining a complaint that was submitted to the House Watchdog Committee, with regards to a property-owner who was asked for a €200.000 bribe so that their property was included in the residential zone of Kouklia.

Reflection after euphoria brought on by records

Phileleftheros’ author says that while we have been looking at the increases in tourist arrivals to Paphos in the past few years, it is now time to look at the possible losses in tourist arrivals due to Brexit. The author argues that the situation with Brexit is still fluid and has started worrying the tourism actors of the district, who hope that the summer 2019 agreements will be finalised before the final agreement between London-Brussels.

Government wants to abolish collective contracts

Article by Lefteris Georgiades, President of the hotel workers union of PEO, who points out the various objections the union has with regards to the new legislation that is being promoted for the operation of hotels. They argue that their positions were not taken into account and that the unions were ignored in the consultations before the bill was drafted.

3 big reforms are being pushed forward

Alithia reports that political leaders were positive with regards to the biggest matters that were discussed during yesterday’s meeting with the President of the Republic, which are the implementation of GHS, the National Hydrocarbons Fund, and the reform of the Judiciary. Government spokesman Prodromos Prodromou said that everyone agreed that the GHS will go forward according to the legislation that was passed by the House by a unanimous vote. Both the parties and the government expressed that they are ready to deal with any problems they may face during the course of the Scheme’s implementation. Prodromou said that although some concerns were expressed by some of the political leaders, they all agreed to the GHS’ implementation as is. AKEL expressed its opposition to the Employers and Industrialists Federation’s (OEV) proposal to postpone the contributions to the GHS, saying that the GHS’ quality will be compromised if this indeed takes place. DIKO also said that it is opposed to OEV’s proposal, saying that the Scheme should be implemented according to the legislation that was passed.

OEV intervention causes many reactions

Haravgi reports that the ball is now in the government’s court, having received political support by the majority of parties yesterday to go forward with the GHS’ implementation. The article as above, goes on to report that OEV’s proposal was also discussed with AKEL officially condemning it. AKEL said that there may be some weaknesses in the proposed scheme but these in no way justify postponing contributions. The article adds that trade union PEO said that OEV’s proposal to postpone contributions to the GHS until an agreement between the HIO and doctors/hospitals is reached, contributes to the effort to undermine the GHS. In a statement, PEO reminded that OEV along with the insurance companies had been opposed to the GHS since the beginning and were proposing a multi-payer health insurance system.

GHS contributions from interest rates, dividends and rental income

Politis provides an explanation of how the GHS will be financed and what each natural person will have to contribute to the system. The article says that a circular will be issued in the coming days concerning the contribution procedures. The Tax department will collect GHS contributions on income, taxes, rental income and dividends. The General Health Scheme will be a universal system and natural persons will be obliged to contribute to the system as a percentage of their earnings. Companies will not be obliged to contribute to the GHS. The payment of contributions from earnings will be 1,7% from 1^st March until 28 February 2020 and 2.65% from 1^st March 2020. Self-employed persons will contribute 2.55% of their earnings until 28/2/2020 and 4% until 1/3/2020.

The effort to undermine the GHS

Politis reports that following the meeting with President Anastasiades, political leaders were positive with regards to the implementation of the GHS. However, the author reports, a lot of concerns were heard during yesterday’s meeting. For example, EDEK’s leader said that the General Health System is not sustainable and the president of DIKO said that before beginning with the contributions to the system, we should first see which doctors will be included in the system. Furthermore, Averof Neofytou and Nicolas Papadopoulos wondered what will happen if doctors do not join GHS. The author argues that some of the politicians acted as representatives of the Cyprus Medical Association and tried to undermine the effort for the General Health System with their concerns and even their silence.

3.500 people are diagnosed with cancer every year

4^th February is World Cancer Day. On this day an awareness campaign will begin in Cyprus, in order to inform and sensitise the public on the prevention and quick diagnosis of cancer. The campaign will be using the moto “I am and I Will”. The campaign was announced at a Press Conference at the Ministry of Health where it was reported that in Cyprus, 3,500 people are diagnosed with cancer every year. The President of the Bank of Cyprus Oncology Centre Lazaros Savvides said that at the moment there are 38,800 people suffering from cancer in Cyprus. Last year there were 51,000 patients. 14,579 chemotherapy and hormone therapy sessions and 29,369 radiotherapy sessions took place last year.

Flu epidemic in Europe

Phileleftheros reports that is a flu epidemic in many European countries with the European Centre for Disease Prevention and Control confirming that over 18,048 have been infected. The majority of cases (97.7%) are caused by flu type A (H1N1). This virus type appeared in 2009 and was considered a significant mutation since it caused an epidemic in many countries of the world with many cases of mortality. 61 people died in Romania and the country’s Ministry of Health urged citizens to buy the necessary antiviral medicines in order to treat respiratory viruses. The flu epidemic has also affected Bulgaria, where many schools remained closed in the last few days.