Daily Review - 21/2/2019

In today’s press:

Part of five-floor building in Nicosia put to auction

Part of a five-floor, 421 square-metre building in the Tripiotis area of Nicosia is going to auction following an application by Hellenic Bank. According to the auction notice uploaded to the Interior Ministry’s website, the part that will be put to auction covers 50% of the building; a shop (ground floor, basement and mezzanine), and five apartments on other floors. According to the APS website, the building is at the junction of Archbishop Makarios Avenue, Boumboulina Street and Hera Street, along the southern, western and eastern limits of the area. The building, named Makariou Toumazis Tower, was built around 2000.

Shielded from the financial war!

Main opposition AKEL MP George Georgiou writes an opinion article on what he calls a huge financial and commercial law that has broken out between the powerful countries of the world – namely the US, Russia and China – and how Cyprus is right at the centre of it. Among other, he writes that the Americans have been methodising and promoting their own model-system in Cyprus, which comes into conflict with Russian interests. Huge sums have been invested in Cyprus by American funds, he says, while the Cypriot banking system is fully controlled by American capital. The huge investments by American billionaire Wilbur Ross in Bank of Cyprus, as well as by Third Point in Hellenic Bank, speak for themselves, says Georgiou.

2.77% yield on new bond “expensive”

Borrowing costs in Cyprus are still quite high, compared with those of other euro area countries, even though the island’s creditworthiness has exited the ‘junk’ category. It is still much cheaper for investors to purchase debt in Spain, Portugal and Ireland. The 15-year Cypriot bond has a yield of 2.77%, when in the secondary market the corresponding Spanish bond has a yield of 1.79%, the Portuguese 1.98% and the Irish 1.24%. The Cypriot bond is much cheaper than Italy’s, however, which currently stands at 3.12%. Essentially, Cypriot taxpayers will pay €415m in taxes, while the Portuguese will pay €297m, and the Irish €186m. The cheapest interest rates are recorded in Germany (0.35%), The Netherlands (0.50%) and Finland and Sweden (both 0.76%).

Capital above the supervisory requirement

Bank of Cyprus’ supervisory capital exceed the minimum supervisory requirements, the bank said in an announcement. It said that good progress had been made with the completion of the Helix Project, which saw the bank sell €2.7b of NPLs. Based on the completion of the ECB’s stress test in 2018, and based on the preliminary notification it has received, its CET1 and capital adequacy ratios have remained unchanged. The requirements of the minimum CET1 is expected to reach 10.5%.

Danske under the microscope

The European Banking Authority announced it has opened a formal investigation into a possible breach of Union law by the Estonian Financial Services Authority and the Danish Financial Services Authority in connection with money-laundering activities linked to Danske Bank, particularly its Estonian branch. The commencement of the investigation follows a letter from the European Commission calling on the EBA to use its powers to examine whether there was failure by the Estonian and Danish competent authorities to comply with their obligations under Union law. Before formally opening the investigation, the EBA said it conducted preliminary inquiries with both authorities.

Committee of permanent secretaries to manage CCB real estate

The Cabinet has appointed a committee – comprising three ministerial permanent secretaries – to manage the real estate owned by the former Cyprus Co-operative Bank. The news was announced yesterday by Finance Minister Harris Georgiades, who said in a radio interview that this was part of the President’s commitment to concede certain properties to communities and municipalities for public use. He said the state intended to acquire some of the properties that were now being managed by KEDIPES, but stressed that the transfers will not be made for free, but in line with specific purchasing terms. “Instead of paying for them, their value will be deducted from the debts owed to the state,” said Georgiades.

Investors will determine the fate of new citizenship scheme

Phileleftheros interviews two citizenship service providers, Arton Capital and Henley & Partners, on their views regarding Cyprus’ new, revised investment scheme. Both believe it is a positive development, but said they were waiting to see what the investors’ reaction will be before they can really understand the impact. Arton Capita’s Akis Kratzis said that some of the changes are positive and allay the concerns of the EU. He also pointed out, however, that such schemes are an important tool for economic policy and bring in considerable revenue. Henley & Partners representative Yiannos Trisokkas said the scheme would ultimately be judged by potential investors, adding that Cyprus had huge potential to attract strong investors and the island needed to capitalise on this.

More aggressive strategy by Hellas Direct

Canadian Group Portag3 Ventures has increased its share in Cypriot insurance company Hellas Direct; a development that signifies Third Point’s exit from the company. Hellas Direct said in announcement that Portag3 had purchased Third Point’s majority stake in the company, while Portag3 CEO Adam Felesky and Portag3’s Parisian partner Helene Falchier will become Board members of Hellas Direct.

We gave the facilities away and now we are renting them…

The gaffe with the bad planning at Limassol port, which led to the state being forced to rent gantry cranes from one of the private investors for €1.75m and provide them to the other investor, was not an isolated case, Haravgi reports. According to new data submitted to the House, the government also conceded facilities to the private investors, which the Customs Department is now being forced to pay rent to use. The sums paid on rent are smaller than those with the gantry cranes; however, the paper says they once again confirm how badly the government handled the privatisation process at Limassol port. According to a memo submitted to the House by the Finance Ministry regarding buildings that the state pays rent for, in 2018 the state paid €8,162 in rent to Eurogate for a facility that is being used by the Customs Department, while this year it is expected to pay €8,980 (it is not clear if the sum will cover the entire year’s rent, as the melon concerns the expenditure from March until December). Furthermore, the state paid rent of €10,588 to DP World Limassol for a second facility that is being used by the Customs Department, while this year it is expected to pay €11,650. Furthermore, the memo showed that the government will pay rent of €39,310 and €787 this year for two facilities that are being used by the Customs Department, though it does not specify who the rent will be paid to. The memo also reveals that a contract has yet to be signed for the first two facilities, as the Law Office has not completed the relevant legal vetting. For the second two facilities there are contracts (one expires in April and the second in July 2022) but it is not specified who they are with. Meanwhile, it appears that the privatisation of Limassol port’s operations has not significantly reduced the needs of the Ports Authority. On the contrary, the Finance Ministry has submitted a second memo to the House asking for the release of funds to cover recruitments for15 posts.

DP World: $421m deal with a Cypriot hue

Dubai World – the mother company of DP World which is one of Limassol port’s private operators – made some intercompany changes recently that have a Cypriot hue, Philenews reports. As we already know, DP World acquired the British P&O Ferries from its mother company for €421m. The deal comes a decade after the mother company had acquired the company in question from its subsidiary. However, the deal also has a Cypriot dimension, as P&O Ferries has proceeded to register all of its ships under the Cypriot flag, in view of the UK’s exit from the EU, with the aim of keeping the tax advantages. The company’s ships carry out routes between Britain and France, The Netherlands and Belgium, among other. Last week, the chairman and CEO of DP World, Ahmed Bin Sulayem, criticised the indecisiveness of British politicians regarding Brexit, saying it did not allow the company to have a clear picture in order to plan its next moves relating to its operations in the UK.

Celestyal Cruises: 2018 a successful year

Celestyal Cruises, the cruising division of Cyprus-listed Louis Plc, is returning to its home base towards the end of the year, offering five week-long cruises out of Limassol, calling on Piraeus, Rhodes, Alexandria, Ashdod and Kusadasi. Dubbed the ‘3 Continents’ cruise, packages are advertised as starting from €849 on board the Celestyal Crystal as of December 2, which complements the 3-, 4- and 7-day cruises in the Aegean with the 1200-passenger Crystal and the larger 1660-passenger Celestyal Olympia. CEO Chris Theophilides said that in the five-year lifespan of Celestyal, operating out of Piraeus, 2018 was its record season with 108,000 passengers, with the aim being to reach 130,000 passengers. He said that the company returns to Cyprus with 7-day cyclical cruises with Limassol as one if its ports of call.

Industrial action warning at Larnaca port

It is only a matter of time before the Cyprus Shipping Association, shipowners and importers/exporters at Larnaca port take industrial action over a dispute concerning the management of bulk cargo, according to Phileleftheros. The Shipping Association has sent a letter to the Transport, Communications and Works Ministry giving it 10 days to provide assurances that the port will not stop handling bulk cargo as part of the concession agreement with the Larnaca port and marina’s bidding investors. It was reported earlier in the month that Bulk cargo of exports such as gypsum and imports such as grain and animal feed are in limbo as the candidate investor has not included a relevant provision in its plans for the port and marina. Instead the investor wants to create high-quality marine, commercial and housing services. For this reason, the proposal provided that bulk cargo imports/exports would be handled at the new port that is being planned in Vasilikos, to service offshore hydrocarbon activities. However, the Finance Ministry’s proposal to build the new port with the BOT method has left bulk cargo exports/imports up in the air, as understandably the potential investors to not want to handle such activities as they are not profitable.

Satellite casino will be located in Geroskipou

Construction for the erection of the casino-resort in City of Dreams Mediterranean in Limassol will begin between May and June. The project that will exceed €0.5b will be taken up by Greek companies Terna and Avax. Soon, the Integrated Casino Resorts Cyprus consortium which is made up by companies Melco and Cyprus Phassouri is expected to reach an agreement with the Greek companies. According to the newspaper’s information, in March the contracts will be signed and construction will begin 2-3 months later. It should be noted that the project’s foundations have already been completed. The casino will open its doors to the public in 2021, with a view to attract an additional 300K tourists. In the meantime, Paphos is expected to get its own casino within 2019, due to the Paphos Mayor’s refusal to approve the location that the consortium chose. As Phileleftheros learns, the consortium has already found a building in the tourist district of Geroskipou and very soon the National Gaming and Casino Supervision Committee is expected to give the green light. The newspaper’s source said that the satellite-casino in Geroskipou will be launched this year and as the ones in Larnaca and Famagusta, it will have 50 slot machines. Yesterday, the Council of Ministers approved all the necessary permits for the satellite casino’s operation in Ayia Napa. The casino will occupy a new building that will be created in the exterior area of Faros Hotel Ayia Napa. It should be noted, the article reports, that last December Nicosia’s and Larnaca’s satellite-casinos were launched. The satellite-casino of the capital is bigger, since apart from slot machines it also has 5 gaming tables. Besides, since last June a satellite casino has been operating in Limassol. Furthermore, yesterday, the Cabinet review the composition of the Coordination Committee for the casino. The Deputy Minister of Tourism, will be participating the in the Commission, instead of the Minister of Energy.

€20.9m in rent for ministries and state services

The Ministry of Finance submitted to the House, a list of 523 properties that are rented by the state for the accommodation of ministries and other state services. According to the relevant memo, in the coming months (March-December 2019), the state is expected to pay €20.9m in rent (not including buildings that are being rented by the wider public sector, such as municipalities and semi-governmental organisations).

SEK: Deputy Ministry of Tourism should have a decisive role

SEK called on the employers’ side to support the renewal of a collective agreement for the hotels industry, in a way that it will rule out any type of labour exploitation. As it mentions, labour peace in the construction as well as the hotels industry, is on the edge and calls on the employers to respect its agreement and return to normalcy in the construction sector. As it concerns hotel employers, SEK says that they should consent through negotiations to the renewal of the collective agreement that expired in December 2018. They mention that the Deputy Ministry of Tourism has to take up a decisive role concerning the tourist product, which cannot be improved while there is labour exploitation and deficiencies in the implementation of the collective agreement.

Deputy Minister reserved about arrivals

Even though Hermes Airports has said that tourist arrivals will be at the same levels as last year, the Deputy Minister of Tourism, Savvas Perdios, keeps his cards close to his chest and appears rather reserved about this year’s arrivals not only due to Brexit but due to a series of reasons. In yesterday’s statement, he reported that it is rather early to be making predictions and that only in March will there be a first indication about the arrivals, following the big tourist exhibitions in Germany and Moscow.

Dialogue for GHS but with bad omens

Alithia reports that the Cyprus Medical Association (CyMA) insists on its unchanged positions with regards to the GHS. Underlining the need for unity, they unilaterally decided for the resumption of negotiations for the GHS on the basis of their own opinions, which as is well-known have been rejected by the government and the parties. CyMA said that the GHS can only be implemented if the government makes the necessary legislative arrangements according to the Association’s unchanging positions. The Association’s Board accepted Dr Alkis Papadouris’ letter of resignation, and said it reserves all its legitimate rights. The cabinet on Wednesday approved the appointment of Dr Christodoulos Kaisis as Commissioner for the General Health System Gesy.

New resignation at CyMA wasn’t accepted

Phileleftheros reports that according to their own information, after Dr Alkis Papadouris’ resignation, another member handed his resignation but this was not accepted by the Board. The article goes on to say that today’s discussion at the Parliament will be completed without a preliminary discussion on the Regulations between the HIO and the CyMA, since last Tuesday’s scheduled consultation was cancelled. The HIO sent a new invitation to CyMA, scheduling a new meeting for next week. The meeting will only concern the Regulations since as CyMA has said, it is willing to resume negotiations on the GHS, only if the legislation is amended. Furthermore, the article reports, the matter of Dr Alkis Papadouris’ resignation from the medical board, is still pending. It is not clear whether Mr Papadouris will be called to give CyMA’s Ethics Committee, more information with regards to his allegations against CyMA’s medical board.

Cabinet approves national strategy on cancer

Phileleftheros reports that the national strategy on cancer, which was approved yesterday by the Cabinet is based on 5 basic pillars. Crucially, the Cabinet decided that the National Committee on Cancer will be the competent body for the strategy’s implementation. The national strategy is based on the following pillars: prevention, timely diagnosis, treatment, reintegration and palliative psychosocial support, recording cases (archiving) and research. As the relevant decision reports “it could be an important tool for the Ministry of Health, so that it can develop policies for the prudent battle against cancer, with a comprehensive patient-oriented approach”. A very important pillar is the one concerning recording cancer cases and the archive, since by analysing factual elements, it will be possible to extract accurate results. Another important pillar, the newspaper reports, is the promotion of specialised research.