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ISSUE 13 APRIL 2012 PRICE €6.95

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THE CYPRUS POWER LIST THE KEY FIGURES WHOSE DECISIONS AFFECT THE ISLAND’S ECONOMY

+ ANTONIS ANTONIOU, NASOS KTORIDES, KYRIAKOS IORDANOU ONLINE GAMES World of Tanks is moving to Cyprus

INTERVIEWS

VICTOR KISLYI LUIS LAGES FIONA MULLEN

LIFESTYLE Fabergé’s Fabulous Creations

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE

1ST ANNIVERSARY ISSUE cover_final.indd 3

02/04/2012 08:59

www.pwc.com/cy

Global knowledge Local expertise

We listen. We learn what you want to do and we help you create the value you are looking for. Value that is based on the knowledge that our almost 1.000 local professionals draw from 169.000 experts in 158 countries. We focus on the provision of Assurance, Advisory, Tax and Global Compliance Services.

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Š 2012 PricewaterhouseCoopers Ltd. All rights reserved

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issue 13 april 2012

08 EDITORIAL 12 UP FRONT 16 FIVE MINUTES WITH

THE POWER

LIST

20 THE PEOPLE WHOSE DECISIONS AFFECT THE ISLAND’S ECONOMY IN POLITICS, BANKING & FINANCE, THE MEDIA, ENTERPRISE, THE LEGAL, ACCOUNTANCY AND FIDUCIARY PROFESSIONS, PUBLIC & PRIVATE SECTOR ORGANISATIONS & ASSOCIATIONS AND THE CHURCH

+ OPINION CYPRUS RETURNS TO THE ‘PREMIER LEAGUE’ OF TRUST JURISDICTIONS

by Andreas Neocleous 18 DOING BUSINESS IN CYPRUS

by Tassos Anastasiades

52

LAIKI BANK LOOKS TO THE FUTURE

by Annita Philippidou 52 STEPPING OVER THE SNAKE

by Peter Economides

98

36

30

58 FEATURE 54 | CHAMBERS & PARTNERS FEATURES CYPRUS’S TOP LAWYERS Excerpts from the Cyprus section of the 2012 edition of Chambers Global which was published in March

58 | THE ISLAND OF SUN, SEA AND… ONLINE GAMES

The Belarusian development team of the Internet gaming sensation World of Tanks is moving to Cyprus

62 | FIFTY YEARS ON The Institute of Certified Public Accountants of Cyprus (ICPAC) has a new General Manager 64 | POWER SHARING How Nasos Ktorides plans to make Cyprus a vital link in the world’s most ambitious undersea electricity cable project.

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

72 80 83 88 94

{money} {business} {economy} {tax&legal} {lifestyle}

EDITORIAL

I ISSUE 04 JULY 2011 PRICE €6.95

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INTEGRATING ART INTO A WEALTH MANAGEMENT STRATEGY FROM ART LOVER TO ART INVESTOR MANAGING THOSE MILLION-DOLLAR DEALS THE WORLD’S MOST EXPENSIVE PAINTINGS

+ INTERVIEWS TIM WARD ZACHARIAS IOANNIDES DAVID ULRICH RUSSIA

ISSUE 05 AUGUST 2011 PRICE €6.95

INTERVIEW

CREATIVE ACCOUNTING

How much is its business worth to Cyprus?

Chiara Corazza Greater Paris Investment Agency

The World’s Ten Biggest Financial Scandals

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

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THE

TOP

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LAW FIRMS

THE VIEWS OF 11 TOP BANKERS ON THE CYPRUS ECONOMY THE BANKING SECTOR FUTURE PROSPECTS

+ ANALYSIS: CYPRUS AFTER THE VASILIKOS ACCIDENT INVESTING DEFENSIVELY INTERVIEW

CHINA

The China Miracle Protecting wealth The Gold Guide during times to investment there of uncertainty

Olga Rybalkina Alex Christoforou

IN CYPRUS

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BANK STATEMENTS

5O + EXCLUSIVE INTERVIEW ALEXANDER DOWNER ON ‘THE PRICE OF FAILURE’ ENERGY

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

Natural Gas A blessing or a curse?

INVESTMENT

Where is Facebook’s Secret Sauce?

INTERVIEWS

Philip Hourquebie Barclays Wealth

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MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

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Gold ISSUE 10 JANUARY 2012

INVESTMENT

GUIDE 2012 TOP STOCKS, KEY STRATEGIES, BEST OPPORTUNITIES & ADVICE FROM THE EXPERTS

+ DEMETRA KALOGEROU, PETROS LIVANIOS, DARIOS MELAS 2012

One step forward, Two steps back

EUROZONE

Breaking up is hard to do?

INTERVIEWS

Andreas Athinodorou Andrey Dashin Ester Levanon

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE / OPINION

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THE INTERNATIONAL INVESTMENT, BUSINESS & FINANCE MAGAZINE OF CYPRUS Gold ISSUE 12 MARCH 2012

joy

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

ALL 4 ONE

THE

THE CEOs OF THE ‘BIG FOUR’ ACCOUNTING

OF... TAX

John Vickers, Chief Editor

FIRMS ARE UNITED ON HOW CYPRUS SHOULD ADAPT TO THE NEW SERVICES ECONOMY

ARTICLES I INTERVIEWS I EXPERT OPINION I QUOTATIONS, FACTS & FIGURES

+ PETROS LIVANIOS, GEORGE POUFOS, DESPINA THEODOSSIOU RATING AGENCIES Credit where it’s due?

SERVICE

Move over sun-and-sea economy!

OPINION

Michalis Attalides Savvas Savouri Andreas Theophanous

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE

nformation was once quite a scarce and valuable commodity. Today, there often seems to be so much of it available – and free – that many young people, in particular, wonder how we ever existed without the Internet and why we actually paid to receive our daily/weekly/monthly supply of news and opinion. But while the death knell has been sounding for the printed word for the last couple of decades and more, magazine publishing has resolutely ignored it as readers continue to obtain their daily news from TV, radio and online sources while remaining faithful to the traditional media for deeper analysis, background and editorial content.

The decision to publish the first issue of Gold in April 2011 was based on a firm belief that the island’s professional services sector was not only key to the economy but one of the few that could be expected to exhibit growth during a time of relative economic stagnation. This has proved to be the case and, over the past 12 months, Gold has seen its readership grow correspondingly, particularly among those involved in the professional services sector.

A first anniversary is always worth celebrating and I am delighted to be able to look back over a challenging, interesting and exciting year in which, together with news, views, analysis and specialist topics, we have brought groups of experts together in panel discussions, obtained exclusive interviews from key figures in a variety of sectors and persuaded a considerable number of normally reticent experts to share their opinions and ideas with us.

We have also implemented a few minor changes to the magazine over the past few months, mainly in response to your feedback requesting greater emphasis on local developments and issues. Eagle-eyed readers may also have spotted a small change to our subtitle as we have become more specifically ‘The international investment, finance and professional services magazine of Cyprus’ I look forward to a second successful year of Gold and I sincerely hope that you will be with us this time next year.

+ ELENA AMBROSIADOU, MEGAN GREENE, PRADEEP KUMAR REAL ESTATE

Luxury Properties & Major Projects

cover gold march 2012.indd 1

TRANSPARENCY How it is perceived in Cyprus

OPINION

Nicos Rolandis Theodore Panayotou Joanne Theodorides

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE

29/02/2012 12:58

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

john@imh.com.cy

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Happy Birthday to… Gold

ISSUE 13 MAY 2012 PRICE €6.95

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

THE CYPRUS POWER LIST THE KEY FIGURES WHOSE DECISIONS AFFECT THE ISLAND’S ECONOMY

+ ANTONIS ANTONIOU, NASOS KTORIDES, KYRIAKOS IORDANOU ONLINE GAMES World of Tanks is moving to Cyprus

INTERVIEWS

VICTOR KISLYI LUIS LAGES FIONA MULLEN

LIFESTYLE Fabergé’s Fabulous Creations

PLUS:

MONEY / BUSINESS ECONOMY TAX & LEGAL LIFESTYLE

cover_final.indd 3

29/03/2012 09:46

PUBLISHED BY IMH ISSN 1986 - 3543

MANAGING DIRECTOR:

George Michail

GENERAL MANAGER:

Daphne Roditou Tang

MEDIA MANAGER: Elena Leontiou EDITOR-IN-CHIEF:

John Vickers

SENIOR EDITOR:

Costa Ioannides

CONTRIBUTING EDITORS:

Antonis Antoniou, Stella Mourettou, Maria Pilidou CONTRIBUTORS TO THIS ISSUE:

Tassos Anastasiades, Chambers & Partners, Peter Economides, Nathalie Kyrou, Andreas Neocleous, Annita Philippidou, Michalis Zambartas ART DIRECTION:

Anna Theodosiou SENIOR DESIGNER: Maria Kyriakou PHOTOGRAPHY:

Olesia Constantinou, Jo Michaelides MARKETING EXECUTIVE:

Kevi Chishios

SALES & BUSINESS DEVELOPMENT EXECUTIVE:

Christos Kyriakides

ADVERTISING EXECUTIVES:

Irene Georgiou, Christopher Constantinou OPERATIONS MANAGER:

Voulla Nicolaou

SUBSCRIPTIONS:

Themoula Leonidou PRINTERS:

Cassoulides Masterprinters CONTACT: 5 Aigaleo St., Strovolos 2057, Nicosia, Cyprus Mailing address: P.O.Box 21185, 1503, Nicosia, Cyprus Tel: +357 22505555, Fax: +357 22679820 e-mail: gold@imh.com.cy website: www.goldmagazine.com.cy

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30/03/2012 09:52

THANK YOU

W

ith this 13th issue we celebrate Gold’s first year of publication. Our sincere thanks go to everyone who has contributed in any way to the success of the magazine, from our own writers and designers to the external professionals, experts, advisers and printers. Particular thanks go to two groups of people: our readers, without whom there would be no reason to publish a special-interest magazine such as Gold, and our advertisers, whose support is essential for us to continue and to improve every month. To every company, organisation and association that has shown faith in IMH and Gold from our first issue in April 2011, we would like to say a big Thank You and we look forward to continuing our excellent relationship with all of you throughout 2012 and beyond.

Multimarine Services Ltd

Cyprus

up front

Keeping up with the price of gold

P

wC’s recentlypublished 2012 Gold Price Report assesses gold companies globally, with companies surveyed representing 26.5 million ounces of gold mined in 2011, and 37.75 million ounces to be mined in 2012.

Some 80% of the mining executives surveyed expect the price of gold to continue to increase in 2012, with the majority of respondents expecting gold to peak at $2,000. 62% of respondents reported that the price of gold was positively impacting their stock price, yet the impact was less than expected. Gold has risen 23.4% so far this year, but the S&P/ TSX Global Gold Index had increased by only 3.9% by November 30, 2011.

One main driver behind this unprecedented disparity between the price of gold and gold stocks is the recent popularity of ETFs. This disparity is having an impact on how executives plan to spend their increased cash flow: 27% made payments to dividends in 2011 (a notable increase from only 9% in 2010) and 29% expect to spend their cash on acquisitions in 2012 (up from 19% in 2011).

To provide an advantage to those investing in their companies rather than ETFs, many gold mining companies have started or increased dividends. As of November, dividend payments for the top 20 gold mining companies were up 44% from 2010. In 2010, dividends had increased by only 18% from 2009.

To date in 2011, there have been 544 gold acquisitions with an approximate value of $11.2 billion. As of November 30, the volume of acquisitions increased by 12.6% and values decreased by 38.4%, compared to the same period in 2010.

Download the full report at: http://www.pwc.com/ca/en/mining/publications/gold-price-survey2012-en-v2.pdf

12 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

CCCI BUSINESS FORUMS IN AUSTRIA AND LEBANON

T

wo Business Forums aiming at the further promotion of Cyprus as an International Financial and Business Centre take place in Austria on 22 May and in Lebanon on 28-29 May 2012. The Austria meeting, which coincides with an official visit to the country

by President Demetris Christofias, will be held in Vienna with the aim of promoting Cyprus and strengthening economic ties between Cyprus and Austria. It is organised by the Cyprus Chamber of Commerce & Industry in cooperation with the Cyprus Ministry of Commerce, Industry & Tourism and the Cyprus-Austria Business Association. For information, contact Panayiotis Panayi in the Department of Services & Trade at the Cyprus Chamber of Commerce & Industry on 22889890. Two further meetings will be held in Beirut and Tripoli on 28 and 29 May respectively as part of a Business Forum organised by the Cyprus Chamber of Commerce & Industry and the Cyprus-Lebanon Business & Professional Association, in cooperation with the Cyprus Ministry of Commerce, Industry & Tourism.

Both events will include Business to Business meetings. For information, contact Zacharias Manitaras in the Department of Services & Trade at the Cyprus Chamber of Commerce & Industry on 22889890 or by e-mail: manitaras@ccci.org.cy

CYPRUS FIDUCIARY ASSOCIATION APPOINTS ITS FIRST GENERAL MANAGER

George Ioulianos

THE RECENTLY-FORMED CYPRUS FIDUCIARY ASSOCIATION (CFA) HAS APPOINTED GEORGE IOULIANOS AS ITS GENERAL MANAGER. IOULIANOS GRADUATED FROM THE UNIVERSITY OF WISCONSIN WITH A DEGREE IN APPLIED MATHEMATICS AND ECONOMICS BEFORE POSTGRADUATE STUDIES IN FINANCE AND ECONOMICS AT THE LONDON SCHOOL OF ECONOMICS & POLITICAL SCIENCES. ON HIS RETURN TO CYPRUS, IOULIANOS JOINED THE ECONOMICS RESEARCH UNIT OF THE UNIVERSITY OF CYPRUS AS AN ACADEMIC RESEARCHER IN THE BUSINESS SECTOR. HE SUBSEQUENTLY WORKED IN THE FIELD OF MANAGEMENT CONSULTING AND FINANCIAL ADVISORY SERVICES, HAVING SERVED AS A MEMBER OF THE ADVISORY GROUP OF DELOITTE & TOUCHE CYPRUS, AND MANAGER AT THE AUDEH GROUP OF COMPANIES. PRIOR TO HIS CFA APPOINTMENT HE RAN HIS OWN CONSULTING FIRM.

Anna Vissi

Haris Loizides MP and Eva Georgiades

(l-r) Irina Bykova, Costas Ioannou

Demetra Ioannou and Eythymios Diplaros, MP

George Michail (Managing Director of IMH) and John Vickers (Chief Editor of Gold)

(l-r) Alpari CEO Olga Rybalkina, Anna Vissi, Andrey & Julia Dashin

Phidias Pilides (President of the Cyprus Chamber of Commerce and Industry)

Russian Ambassador Vyacheslav Shumsky Alpari Tower

Alpari celebrates

with AnnA Vissi

A

lpari Financial Services Ltd (Alpari FS), one of the world’s leading forex brokers, celebrated the opening of its new state-of-the-art Alpari Tower office building in Limassol last month with an exclusive event featuring an exclusive performance Cyprus-born singing star Anna Vissi. The event was attended by dignitaries, politicians, businessmen, media representatives and associates of Alpari. They included the Russian Ambassador to Cyprus, Vyacheslav Shumsky, and the President of the Cyprus Chamber of Commerce and Industry (CCCI), Phidias Pilides, both of whom gave a brief address. Andrey Dashin, one of the founders of Alpari, said that the opening

of the new building marked an important moment in the company’s 14-year history.

“We started with a small office with just a few staff, and now Alpari is successfully established in 22 countries. The Alpari Tower has been specifically selected to accommodate this rapid growth, and it will play a key role in the ongoing and future expansion of the Alpari family.”

Following the addresses and an impressive cocktail reception, guests were treated to an exclusive performance by Greek Cypriot superstar Anna Vissi, who sang a selection of her biggest hits and some traditional Cypriot songs, accompanied by piano and harp.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES OF CYPRUS

Gold 13

up front

the world’s Most ProductiVe cities

T

he influential Brooking Institution think tank, based in Washington DC, recently issued a report comparing per capita Gross Domestic Product and changes in employment data from 2010 to 2011 in 200 of the world’s largest metropolitan areas. The report found these areas produced 48% of global output despite accounting for only 14% of the world’s population and employment.

It also revealed that 90% of the fastest-growing economies are located outside North America and western Europe. The following are the Top Ten most productive cities in the world:

1. HARTFORD, USA PER CAPITA GDP: $75,086

Hartford is the capital of Connecticut and home to some of the largest insurance companies in the US, including Aetna, Uniprise and Travelers.

The presence of these companies has earned the city the nickname of The Insurance Capital of the World.

2. OSLO, NORWAY

World.

PER CAPITA GDP: $74,057

Oslo, the capital of Norway, ranked as the world’s second most expensive city after Tokyo in 2010 and 2011 is home to a large maritime sector as well as Scandinavia’s largest independent research organisation (the Foundation for Scientific and Industrial Research, which employs more than 2,000 people). than 3. 2,000 SANpeople).

JOSE,

USA

PER CAPITA GDP: $68,141

San Jose is California’s third-largest city but it has the state’s highest per-capita GDP. The city was at the epicentre of the technology boom in the

14 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

1990s and it is still known as the Capital of Silicon Valley. Adobe, Cisco Systems, Hewlett-Packard, IBM and TiVo have major offices there.

4. ABU DHABI, UAE PER CAPITA GDP: $63,859

Abu Dhabi, the capital of the United Arab Emirates, was responsible for generating almost 55% of the GDP generated by the UAE in 2007. It is the site the Central Bank of the UAE and the country’s largest oil producer with 2.3 million barrels per day in 2010. day 2010.

5.inBRIDGEPORT,

USA

PER CAPITA GDP: $63,555

Bridgeport, Connecticut’s most populous city (144,000), earns a great deal of revenue from its successful medical sector. Three of its five top employers are in this sector: St. Vincent’s Medical Center, Bridgeport Hospital, People’s United Bank, University of Bridgeport and Bridgeport Health Care Center.

6. ZURICH, SWITZERLAND PER CAPITA GDP: $63,236

Zurich, the largest city in Switzerland, is home to some of the world’s biggest financial institutions including Credit Suisse and UBS. Its low tax rate has attracted companies such as Google, Microsoft and IBM, which have offices there. It is also the location of the Swiss Stock Exchange.

7. WASHINGTON D.C., USA PER CAPITA GDP: $62,943

The World Bank and the IMF are headquartered in Washington, where the government payroll

accounts for more than a quarter of the jobs. The three largest non-political employers are Georgetown University, George Washington University and the Washington Hospital Center.

8. STOCKHOLM, SWEDEN PER CAPITA GDP: $61,458

Stockholm, Sweden’s capital and largest city, is home to many major national banks and insurance companies. Of all the venture capital investments in Sweden, more than one-third are in Stockholm, mostly in the areas of electronics and information technology. H&M has its headquarters there too.

9. BOSTON, USA

PER CAPITA GDP: $60,074

Boston is the capital of Massachusetts, home to Harvard University, Boston University and the Massachusetts Institute of Technology (MIT), and students account for $4.8 billion of the city’s annual economy. Liberty Mutual, Gillette and Bain Capital have there headquarters there.

10. SAN FRANCISCO, USA PER CAPITA GDP: $58,783

San Francisco is a favourite tourism destination and the tourism industry is the city’s largest private-sector employer, estimated to be worth $7.8 billion per year. Its economy also has been positively affected by its proximity to Silicon Valley, attracting thousands of technology industry professionals.

The Marshall Islands The Marshall Islands TheCorporate Marshall Islands Registry Registry The Marshall Islands TheCorporate Marshall Islands Corporate Registry

HTT AUDIT LTD APPOINTED CORRESPONDENT FIRM OF FIRST ASIAN ACCOUNTING NETWORK

Corporate Corporate Registry Registry

©Corbis

H

TT Audit Ltd has been appointed as a correspondent firm of Reanda International, the first Asian accounting network to go global. With an annual turnover of US$87.3 million, Reanda International currently comprises 40 offices employing 96 partners and 2,066 staff. HTT Audit Ltd is first European member of the network, which is ranked among the top 20 Accounting Networks worldwide, having achieved an astonishing growth rate of 42% (based on aggregate fee income) last year, despite the global economic crisis and financial instability.

Nicosia-based HTT Audit Limited is managed by three partners with significant experience in the audit, tax and advisory field. The firm was established in 2009 and has a staff of 15 offering statutory audit, tax and corporate & financial advisory services including internal audit, business valuations and restructurings along with listed companies’ related services.

“We are pleased to welcome HTT Audit Limited to our network,” said Franklin Lau, CEO of Reanda International. “In addition to our strategic expansion in the Asian region, this is a groundbreaking move in establishing our presence in Cyprus. Cyprus, situated at the crossroads of Europe, Asia and Africa, together with its favourable tax regime and the modern infrastructure, serves as a springboard for investment between these three continents. It is an important investment hub for channeling investments in Europe for Asian enterprises. HTT Audit Limited stands out in terms of its vision, strong tax practice and its fast-growing international client base.

We trust that the dynamism and energy of the new team will create new and exciting opportunities for us within the network.”

The Network has members in China, Hong Kong, Japan, Malaysia, Macau, Cambodia, Vietnam, Singapore and Australia.

BUSINESSWOMAN

OF THE

YEAR DESPO LEFKARITI WAS NAMED BUSINESSWOMAN OF THE YEAR AT LAST MONTH’S ANNUAL MADAME FIGARO AWARDS. LEFKARITI SET UP HER OWN MARKETING AND COMMUNICATION COMPANY IN 1985. WHAT BEGAN AS A TWO-WOMAN OPERATION IS NOW DELEMA, THE LARGEST COMMUNICATIONS GROUP IN CYPRUS. THE AWARD, SPONSORED

BY LAIKI BANK’S WOMAN’S CARD, WAS THE RESULT OF A PUBLIC VOTE BY READERS OF THE CYPRIOT EDITION OF MADAME FIGARO.

The The leading leading jurisdiction jurisdiction for for The leading jurisdiction for leading jurisdiction •The Management, The leading jurisdiction for for • Asset Asset Management, • Asset Management, Asset ••• Vessel Ownership Asset Management, VesselManagement, Ownership • Vessel Ownership Vessel Ownership ••• Real/Intellectual Vessel Ownership Real/Intellectual • Property Real/Intellectual Holdings Property Holdings •• Property Real/Intellectual Real/Intellectual Holdings Property Holdings •• Initial Offerings/ Property Holdings Initial Public Public Offerings/ • Publicly Initial Public Offerings/ Traded Companies Traded Companies •• Publicly Initial Offerings/ Initial Public Public Offerings/ Publicly Traded Companies Publicly Traded Publicly Traded Companies Companies

IRI Hellas Ltd. IRI Hellas Ltd. IRI Hellas Ltd. inIRI affiliation with the Marshall Hellas in affiliation with theLtd. Marshall Islands Islands IRI Hellas in affiliation theLtd. Marshall Islands Maritime & with Corporate Administrators Maritime & with Corporate Administrators in affiliation the Marshall Islands

Maritime & Corporate Administrators affiliation the Marshall Islands tel: 4294 404 piraeus@register-iri.com tel: +30 +30 210 210in 4294 404&||with piraeus@register-iri.com Maritime Corporate Administrators tel: +30 210 4294 404 | piraeus@register-iri.com Maritime & Corporate Administrators www.register-iri.com www.register-iri.com tel: tel: +30 +30 210 210 4294 4294 404 404 | | piraeus@register-iri.com piraeus@register-iri.com www.register-iri.com www.register-iri.com www.register-iri.com

interview

five minutes with...

ANTONIS ANTONIOU, Executive Director, Giovani Group of Companies

Gold: How would you describe the present state of the real estate market?

The current climate in the real estate market all over the world is, unfortunately, not very positive. This is mainly due to the fact that the banks are not willing to loosen their criteria. It’s no secret anymore that a mortgage facility is more important than the product (property) itself. In Cyprus we face the same problems. Strict banking criteria, a lack of trust, combined with hesitant buyers, have caused the market to stagnate. However, I strongly believe that this trend will change before the end of the year, as there are many exciting opportunities for investors in the Cyprus market. The same thing is expected to happen in major cities around the world as prices have fallen dramatically, thereby presenting good opportunities.

What can be done to boost Cyprus as an attractive location for luxury property?

In order to become more competitive, Cyprus needs to establish a variety of infrastructure projects such as marinas, golf courses, business parks and so on.

So far, a lot has been said but little has been done by the authorities. At the moment there are plenty of projects in the pipeline but if Cyprus fails to complete them as promised we will be considered an untrustworthy destination by investors. We also have to bear in mind that our competitors (such as Malta, some Eastern European countries, etc.) are moving extremely fast, announcing – and completing – state-of-the-art facilities that attract interest from around the world. We need to be more decisive.

Of all the popular coastal locations in Cyprus, which do you feel will be the most highly sought-after over the next 10 years and why?

There is no doubt that Limassol has entered a new era in which a large variety of projects are helping the city to

16 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

upgrade the services and facilities offered to residents and visitors. This can only have a positive impact on the broader property market. However, I personally believe that the areas with the greatest potential are Protaras and Agia Napa.

The Famagusta distict undoubtly has the most beautiful beaches and the most comprehensive tourist infrastructure.

Both of these factors can help it grow and prosper in the near future as tourism again proves to be Cyprus’ niche market.

Moreover, various infrastructure projects are under way and a prosperous and bold development of the district looks likely to take place in the coming years.

What level of interest are you seeing in investment by High Net Worth buyers from high-growth economies such as Russia and China?

High Net Worth investors are coming to Cyprus from all parts of the world.

Recently we have seen a great deal of interest from Russians, for example, but there is also an increasing trend of buyers coming from the countries of the Middle

East. Basically we are talking about business people who are looking for a safe haven to establish their businesses and settle their families. I believe that Cyprus has a complete package to offer these people and with this in mind the government needs to be more flexible with its entry criteria. It should also strategically invest in this market during the next decade in order to help build a sustainable and legally safe business environment that will encourage people from around the world to relocate to Cyprus.

What else could the government be doing better in order to help local real estate developers?

First of all, the government needs to find ways to regulate the industry and protect the professionals. As you may be aware, there are no industry standards in Cyprus, nor is there any organisation responsible for regulating the profession of the real estate developers. If we want to talk about a safe and protected market, we must start by setting the standards that will help to build a strong industry.

The government needs to find ways to regulate the industry and protect the professionals

main_story1.indd 17

30/03/2012 12:03

opinion

Cyprus Returns to the ‘Premier League’ of Trust Jurisdictions The island now has the most modern and favourable trust regime in Europe

T

By Andreas Neocleous

The amended law brings the trust regime in Cyprus back to the cutting edge internationally

he long-awaited reform of the Cyprus International Trusts Law – a much-needed initiative – finally became reality last month with the passing of the International Trust (Amending) Law of 2011 by the House of Representatives.

When enacted in 1992, the Cyprus International Trusts Law gave Cyprus a ‘stateof-the-art’ international trusts regime, with excellent tax mitigation and asset protection features. However, the world has changed considerably in the intervening 20 years.

New opportunities and investment practices have emerged, which the original law did not take into account. As a result, while the basic structure provided by the International Trusts Law remained sound, it required updating to adapt it to the needs of investors today and in the coming years.

When the 1992 law was drafted, the availability of international trusts was restricted to non-resident settlors in order to prevent tax avoidance by Cyprus residents. It was not clear whether settlors could relocate to Cyprus after establishing a Cyprus International Trust and the resultant uncertainty undoubtedly discouraged many of them from doing so. The amending law provides only that the settlor may not be a Cyprus tax resident in the year preceding the year of creation of the trust.

It also removes the prohibition on resident beneficiaries and on ownership of immovable property in Cyprus, thus avoiding difficulties that might otherwise arise if the settlor or any beneficiary were subsequently to take up residence in Cyprus.

Other new provisions, which are similar to the corresponding provisions of Jersey and Guernsey law, give settlors great flexibility to adapt to changes in circumstances or objectives.

The 1992 law restricted the maximum life of international trusts to 100 years from the date on the trust came into existence.

However, this restriction on the maximum life of trusts came to be seen as a disadvantage and several jurisdictions have removed any restriction on the duration of trusts. The amended law follows this practice, by providing that

info: Andreas Neocleous is an Advocate, Founder and President of the Board of Andreas Neocleous & Co LLC. 18 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES

from the date the amendment takes effect and subject to the terms of the trust, there will be no limit on the period for which a trust may continue to be valid and enforceable.

The amended law gives trustees the same investment powers as those of an absolute owner, allowing them to invest in a broader range of investments for the best interests of the beneficiaries. It also removes any doubt regarding trustees’ ability to invest in Cyprus by including a new section specifically empowering trustees to invest in movable and immovable property both in Cyprus and overseas, including shares in companies incorporated in Cyprus. The abolition of the prohibition on investment in Cyprus will remove an obstacle to inward investment and provide a boost to the real estate market, which has stagnated since the onset of the global economic crisis.

The amended law addresses a number of perceived deficiencies in the trust regime in Cyprus, bringing it back to the cutting edge internationally. The amendments have been welcomed by practitioners and business leaders in Cyprus and abroad, and have received extensive positive comment in the local and international professional press. The International Trusts Law as amended ensures that settlors and beneficiaries enjoy the highest possible degree of protection and gives Cyprus the most modern and favourable trust regime in Europe and restores it to the ‘premier league of trust jurisdictions.

Our firm has been at the forefront of the movement to modernise the International Trusts Law, having taken the initiative to identify and draw attention to the deficiencies in the existing law. With the overwhelming support of all the relevant professional bodies we have taken the lead in the modernisation process and have assisted with the drafting of the amendments, consultation with experts and interested parties in Cyprus and abroad and discussions with officials in Cyprus to secure their speedy enactment. We are delighted that our efforts have come to fruition and proud to have been involved in giving Cyprus an International Trusts Law that will stand it in good stead for some years to come.

THE

POWER

LIST THE PEOPLE WHOSE DECISIONS AFFECT THE ISLAND’S ECONOMY IN POLITICS, BANKING & FINANCE, THE MEDIA, ENTERPRISE, THE LEGAL, ACCOUNTANCY AND FIDUCIARY PROFESSIONS, PUBLIC & PRIVATE SECTOR ORGANISATIONS & ASSOCIATIONS AND THE CHURCH.

Individuals, companies and organisations are listed alphabetically within each category.

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POLITICS

Sotiroula Charalambous

01. DIMITRIS CHRISTOFIAS

PRESIDENT OF THE REPUBLIC OF CYPRUS

Demetris Christofias was elected President in February 2008. At the time he was General Secretary of left-wing AKEL and serving his second five-year term as Speaker of the House of Representatives.

Andros Kyprianou

He is credited with promoting a wide range of reforms, particularly in local government.

In March he was moved to the Ministry of Commerce, Industry & Tourism.

PARTY LEADERS

07. NICOS ANASTASIADES

CHAIRMAN OF THE DEMOCRATIC RALLY (DISY)

02. YIANNAKIS OMIROU

SPEAKER OF THE HOUSE OF REPRESENTATIVES

Yiannakis Omirou, Chairman of the Socialist party EDEK, was elected Speaker for the five-year term 2011-2016.

Nicos Anastasiades has led his party since 1997 and has already announced his intention to run for President in the 2013 elections.

08. MARIOS GAROYIAN

CHAIRMAN OF THE DEMOCRATIC PARTY (DIKO)

MINISTERS 03. SOTIROULA CHARALAMBOUS

Cypriot-Armenian Marios Garoyian has led DIKO since 2006 and was Speaker of the House from 2008-2011.

MINISTER OF LABOUR & SOCIAL INSURANCE

09. ANDROS KYPRIANOU

Sotiroula Charalambous was twice elected to the House of Representatives for AKEL before GENERAL SECRETARY OF AKEL AN MP being appointed Minister of Labour and SINCE 2001 Social Insurance in 2008.

Andros Kyprianou was elected General Secretary of AKEL following the resignation of Demetris Christofias when the latter became President of the Republic.

04. ELENI MAVROU

MINISTER OF INTERIOR

The former Mayor of Nicosia replaced Neoklis Sylikiotis at the Interior Ministry in March during a mini-reshuffle. Mavrou was twice elected to the House of Representatives for AKEL.

05. VASSOS SHIARLY

DEPUTY CHAIRMAN, DEMOCRATIC RALLY (DISY)

MINISTER OF FINANCE

Vassos Shiarly replaced Kikis Kazamias following the latter’s resignation in March for health reasons. He was previously Group Chief General Manager of Bank of Cyprus and Chairman of the Health Insurance Organisation.

06. NEOKLIS SYLIKIOTIS

Deputy Chairman of his party since 2003, Averof Neophytou served as Minister of Communications and Works from 1999-2003 and is currently Chairman of the House Foreign and European Affairs Committee.

11.

MINISTER OF COMMERCE, INDUSTRY & TOURISM

Dimitris Christofias

MEMBERS OF THE HOUSE OF REPRESENTATIVES 10. AVEROF NEOPHYTOU

One of the most powerful ministers in government, Neoklis Sylikiotis was appointed Minister of Interior by the late President Tassos Papadopoulos in September 2006 and reappointed by Demetris Christofias.

NICHOLAS PAPADOPOULOS

CHAIRMAN OF THE HOUSE FINANCE COMMITTEE

Nicholas Papadopoulos, son of the late President Tassos Papadopoulos, was elected to parliament in 2006.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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PUBLIC & PRIVATE SECTOR DEPARTMENTS, ORGANISATIONS & ASSOCIATIONS CFA SOCIETY OF CYPRUS 12. DEMETRIS NICOLAOU PRESIDENT

The CFA Society of Cyprus has over 50 members representing all major banks and investment firms in Cyprus. Most CFA Society of Cyprus members have earned the Chartered Financial Analyst (CFA) designation.

CIVIL REGISTRY AND MIGRATION DEPARTMENT 13. ANNY SHAKALLI DIRECTOR

Since 2004 Shakalli has headed the Civil Registry and Migration Department which deals with the granting of entry and residence permits, Cypriot citizenship and more.

CYPRUS BAR ASSOCIATION 14. DOROS IOANNIDES PRESIDENT

The Association is the professional body for over 2,000 advocates in Cyprus.

CYPRUS CHAMBER OF COMMERCE & INDUSTRY (CCCI) 15. PHIDIAS PILIDES PRESIDENT 16. PANAYIOTIS LOIZIDES

SECRETARY-GENERAL & CEO The CCCI operates as a Federation of the District Chambers of Commerce and Industry of the island’s five major towns and represents Cypriot businessmen whose interests it promotes.

FARMAGUSTA CHAMBER OF COMMERCE & INDUSTRY

17. GEORGE MICHAELIDES PRESIDENT

LARNACA CHAMBER OF COMMERCE AND INDUSTRY

18. DINOS LEFKARITIS PRESIDENT

LIMASSOL CHAMBER OF COMMERCE & INDUSTRY

19. PHILOKYPROS ANDREOU PRESIDENT

Phidias Pilides

NICOSIA CHAMBER OF COMMERCE & INDUSTRY

20. COSTAS GEORGALLIS PRESIDENT

PAPHOS CHAMBER OF COMMERCE & INDUSTRY

21. GEORGE LEPTOS

Philokypros Andreou

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CYPRUS EMPLOYERS AND INDUSTRIALISTS FEDERATION (OEB) 22. PHILIOS ZACHARIADES CHAIRMAN

23. MICHAEL PILIKOS

ternational investment and business centre and to attract foreign investment to the island.

DEPARTMENT OF CUSTOMS CYPRUS SECURITIES & EXCHANGE AND EXCISE COMMISSION (CYSEC) 33.

28. DEMETRA KALOGIROU CONSTANTINOS CHAIRWOMAN NICOLAIDES DIRECTOR & VAT COMMISSIONER

DIRECTOR-GENERAL

An independent islandwide organisation, the Federation comprises more than 50 professional associations and hundreds of companies operating in all sectors. It represents Cypriot employers at meetings of the ILO and other international bodies.

The Director of the Customs and Excise Department is also the VAT Commissioner. The Department is responsible for the imposition and collection of import duties, excise duties and Value Added Tax (VAT) on imported goods.

CYPRUS ENERGY REGULATORY AUTHORITY (CERA) 24. POLIS MICHAELIDES CHAIRMAN

The CERA was established in 2004 to promote competition in the Cyprus energy market. It supervises and approves all decisions of the Electricity Authority of Cyprus, including those on tariffs.

Demetra Kalogiirou

CYPRUS FINANCIAL SERVICES FIRMS ASSOCIATION (CFSFA) 25. YIANNIS IOANNOU

The Cyprus Securities & Exchange Commission is charged with the supervision, control and operation of the Cyprus Stock Exchange and the transactions it carries out.

CHAIRMAN

The CFSFA is the official representative body of all Cyprus investment firms that are members of the Cyprus Stock Exchange.

All members of the Association are licensed and regulated by the Cyprus Securities and Exchange Commission (CySEC).

CYPRUS SHIPPING CHAMBER 29. EUGEN-HENNING ADAMI

CYPRUS INTERNATIONAL BUSINESSES ASSOCIATION (CIBA) 26. FRIXOS SAVVIDES

DIRECTOR-GENERAL

PRESIDENT

Former Minister of Health Frixos Savvides heads the association, established in 1992 on the initiative of entrepreneurs who had relocated their international activities to Cyprus.

CYPRUS INVESTMENT PROMOTION AGENCY (CIPA) 27. CHRISTODOULOS ANGASTINIOTIS CHAIRMAN

Established in 2008, CIPA aims to contribute to the effective promotion of Cyprus as an in-

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PRESIDENT

30. THOMAS KAZAKOS

Originally functioning as the Cyprus Shipping Council, the Chamber is the trade association of the local shipping industry, representing all the major shipowning, shipmanagement and shipping-related companies based in Cyprus.

DEPARTMENT OF THE REGISTRAR OF COMPANIES AND OFFICIAL RECEIVER (DRCOR) 34. SPYROS KOKKINOS DIRECTOR

The Department of the Registrar of Companies oversees the registration, follow up, control and striking off of companies, partnerships and business names. It deals with bankruptcies, liquidations, trademarks, patents and intellectual property issues.

CYPRUS TELECOMMUNICATIONS AUTHORITY (CYTA)

31. STATHIS KITTIS

CHAIRMAN

32. PHOTIS SAVVIDES

Frixos Savvides

CHIEF EXECUTIVE OFFICER

Despite the liberalisation of the telecommunications market, Cyta remains the leading provider of integrated electronic communications services in Cyprus.

Photis Savvides

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ELECTRICITY AUTHORITY OF CYPRUS (EAC) 35. HARIS THRASSOU CHAIRMAN

36. STELIOS STYLIANOU

GENERAL MANAGER

As the sole supplier of the nation’s electricity, the EAC is responsible for setting electricity prices, thus influencing the level of disposable income for households and operating costs for businesses on the island.

INLAND REVENUE DEPARTMENT 37. GEORGE POUFOS DIRECTOR

NATURAL GAS PUBLIC COMPANY OF CYPRUS (DEFA) 39. COSTAS IOANNOU EXECUTIVE CHAIRMAN

The former CEO of the Electricity Authority of Cyprus (EAC) and Chairman of the Cyprus Energy Regulatory Authority (CERA) heads DEFA, which is responsible for the importation and distribution of natural gas in Cyprus.

LEGAL ANDREAS NEOCLEOUS & CO LLC 42. ANDREAS NEOCLEOUS PRESIDENT OF THE BOARD

The founder and President of the Board of Cyprus’ largest law firm, Andreas Neocleous, is recognized in Cyprus and abroad as a top International Tax Lawyer. His firm focuses mainly on cross-border transactions and has great expertise in the areas of corporate, finance and tax.

ANDREAS SOFOCLEOUS & CO 43. ANDREAS SOFOCLEOUS FOUNDER AND MANAGING PARTNER

THE CHURCH George Poufos

As Director of the IRD since October 2003, Poufos is responsible for the application and enforcement of direct tax legislation, the Double Tax Agreements concluded between Cyprus and other countries, and the collection of public tax revenues.

INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF CYPRUS (ICPAC) 38. THEODOROS PARPERIS PRESIDENT

The Institute is the official regulatory and supervisory body for the accounting profession and promotes the interests of its 3,200 members.

OF CYPRUS 40. ARCHBISHOP

CHRYSOSTOMOS II

The official title of the Head of the Church of Cyprus is Archbishop of Nova Justiniana and All Cyprus. The present Archbishop, who presides over the Church’s large and varied business empire, is frequently outspoken in his views concerning the Cyprus issue.

41. BISHOP NIKIFOROS

OF KYKKOS

The Metropolitan of Kykkos and Tylliria presides over Kykkos Monastery, the wealthiest and best-known religious institution on the island.

Andreas Sofocleous founded the firm in 1995 and it is now one of the most successful corporate and commercial law firms in Cyprus.

ANTIS TRIANTAFYLLIDES & SONS LLC 44. ANTIS TRIANTAFYLLIDES FOUNDER

Long-established Antis Triantafyllides & Sons has a reputation for providing excellent services, especially in the areas of dispute resolution, domestic and cross-border corporate issues.

CHRISTODOULOS G. VASSILIADES & CO LLC 45. CHRISTODOULOS G. VASSILIADES MANAGING DIRECTOR

Established in 1984 by Christodoulos G. Vassiliades, who also heads Ledra Management Ltd, the firm is a broad-based legal practice entrusted by major corporations with their legal matters. It has developed expertise in both domestic and international law to private and corporate clients in the corporate, intellectual property, shipping, trust, mergers and acquisitions, tax and commercial legal fields.

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Kypros Chrysostomides

Christos Mavrellis

Pambos Ioannides

Andreas Neocleous

CHRISTOS PATSALIDES LLC 46. CHRISTOS PATSALIDES

GEORGE Y. YIANGOU & CO 51. GEORGE YIANGOU

joint ventures, mergers and acquisitions, EU and competition law, project finance, ship registration and finance.

Christos Patsalides LLC offers a wide range of services covering all aspects of the law, from legal consultancy and representation in court, to advisory, corporate and financial services in Cyprus and at an International level.

Managing partner George Yiangou provides services mainly to commercial banks, shipping companies, offshore companies and multinationals. He has extensive personal experience in all aspects of legal practice, including corporate law, tax matters, international debt collection, banking, EU law and shipping.

KINANIS LLC 55. CHRISTOS KINANIS

FOUNDING PARTNER

CHRYSSAFINIS & POLYVIOU LLC 47. POLYVIOS POLYVIOU SENIOR PARTNER

48. STELLA POLYVIOU

MANAGING LITIGATION PARTNER

Established in 1903 by the late N.G. Chryssafinis, Chryssafinis & Polyviou LLC is one of the oldest and most prestigious Law Firms in Cyprus.

CHRYSSES DEMETRIADES & CO. LAW OFFICE 49. CHRISTOS MAVRELLIS SENIOR PARTNER

Former Minister of Finance Christos Mavrellis is a highly-regarded figure in the area of foreign investment in Cyprus. Widely recognised as one of Cyprus’ leading lawyers especially in the area of corporate law, he frequently advises international clients on a range of matters.

DR. K. CHRYSOSTOMIDES & CO LLC 50. DR. KYPROS CHRYSOSTOMIDES

FOUNDING & MANAGING PARTNER

Founder member of one of Cyprus’ leading tax law firms, Managing Partner and former Minister of Justice and Public Order Dr. Kypros Chrysostomides is recognised as one of the top individual tax advisers in the world.

MANAGING PARTNER

GEORGE Z. GEORGIOU & ASSOCIATES LLC 52. GEORGE Z. GEORGIOU MANAGING PARTNER

Focusing mainly on the areas of employment and restructuring, Founding and Managing Partner George Z. Georgiou is described by the Chambers and Partners legal guide as a “highly regarded litigator” who is “dedicated, meticulous and knowledgeable”.

GEORGIADES & PELIDES LLC 53. MARCOS GEORGIADES

MANAGING PARTNER

Practising law in Cyprus since 1989, Marcos Georgiades is experienced in conducting private and public takeovers, drafting project financing and security documentation for local and offshore banks, multi-currency loan facility agreements, margin account trading and the introduction of companies to the Cyprus Stock Exchange.

IOANNIDES DEMETRIOU 54. PAMBOS IOANNIDES MANAGING DIRECTOR

Ioannides Demetriou provides legal and advisory services to both public and private sector clients in the fields of commercial disputes, construction, energy,

HEAD OF FIRM

Kinanis LLC’s banking and finance work branches from the firm’s corporate practice. It handles debt finance matters for key clients such as Alpha Bank Group, Probusinessbank and Avangard Bank on an ongoing basis.

L. PAPAPHILIPPOU & CO 56. LEANDROS PAPAPHILIPPOU

SENIOR MANAGING PARTNER

Maintaining a well-established name in the banking and finance markets. L. Papaphilippou & Co’s clients include leading local and international commercial banks and financial institutions.

MARKIDES, MARKIDES & CO 57. ALECOS MARKIDES 58. HERMIONE MARKIDES MANAGING PARTNERS

Established in 1933 by the late Frixos Markides, this long-established firm handles a variety of litigation work including breach of contract, IP infringement and passing off cases.

MONTANIOS & MONTANIOS 59. ACIS, 60. ERIC & 61. ADAM MONTANIOS MANAGING PARTNERS

Montanios & Montanios receives a steady flow of finance work especially in

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COVER STORY

the shipping sector. Managing partner Eric Montanios is singled out by the profession’s Legal 500 for his expertise in asset finance, particularly in the fields of aviation and shipping.

PAMBORIDIS LLC 62. GEORGE PAMBORIDIS MANAGING DIRECTOR

Dr. Pamboridis is a corporate lawyer dealing mostly with matters related to M&As, corporate law, international tax planning, capital markets and alternative finance matters. His extensive shipping background ranks him as one of the leading lawyers in matters of international shipping regulation.

PAPACHARALAMBOUS & ANGELIDES LLC 63. ANDREAS PAPACHARALAMBOUS 64. PAVLOS ANGELIDES MANAGING PARTNERS

company in relation to a share listing on the Hong Kong Stock Exchange.

SCORDIS, PAPAPETROU & CO LLC 68. ANDIS SCORDIS 69. MICHALIS PAPAPETROU MANAGING PARTNERS

BAKER TILLY KLITOU GROUP 72. MARIOS A. KLITOU CHIEF EXECUTIVE OFFICER

As an independent member firm of the Baker Tilly international network, Baker Tilly Klitou offers audit, accountancy and business advisory services in Cyprus as well as Romania, Bulgaria and Moldova

DELOITTE LTD 73. CHRISTIS CHRISTOFOROU

Former government spokesman (1999-2003) Michalis Papapetrou and partner Andis Scordis lead a team of 26 lawyers who provide a CHIEF EXECUTIVE OFFICER comprehensive range of services.

Deloitte Cyprus is part of the wordwide Deloitte organisation with over 480 professionals based locally in Cyprus.

TASSOS PAPADOPOULOS & ASSOCIATES PAPAEFSTATHIOU

ERNST & YOUNG CYPRUS LTD 74. GEORGE KOURRIS

Former President of the Cyprus Bar Association (2000-2006), Nicos Papaefstathiou manages one of the oldest and largest law firms in Cyprus, established in 1971 by the former President of Cyprus Tassos Papadopoulos.

Kourris leads a team of 180 employees in the local branch of Ernst & Young in Cyprus, providing a wide range of accounting-related professional services to clients ranging from private individuals to large multinationals.

70. NICOS

MANAGING PARTNER

COUNTRY MANAGER

One of the country’s leading law firms, Papacharalambous & Angelides LLC specialises in corporate law, mergers and acquisitions, tax law, family law, public and administrative law, Intellectual property law, banking, commercial and financial services law.

PAPADOPOULOS, LYCOURGOS & CO LLC 65. DIMITRIS PAPADOPOULOS 66 DOROS LYCOURGOS MANAGING PARTNERS

Papadopoulos, Lycourgos & Co LLC has a strong presence in the Cypriot domestic market, advising banks such as Hellenic Bank on matters such as secured loans and assets hypothecation.

PATRIKIOS PAVLOU & ASSOCIATES LLC 67. STAVROS PAVLOU MANAGING PARTNER

Stavros Pavlou heads Patrikios Pavlou & Associates LLC, one of the largest and most respected law firms in Cyprus.

Recent activity includes the establishment of a joint venture company with a value over $30m, and advising a Cyprus public

ACCOUNTANCY/ CONSULTANCY AON HEWITT CYPRUS 71. PHILIPPOS MANNARIS

CHIEF EXECUTIVE OFFICER

Aon Hewitt (formerly Aon Consulting Worldwide) is a leading provider of human capital and management consulting services operating from 500 offices in 120 countries providing consulting, outsourcing, and insurance brokerage services.

Christis Christoforou

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EUROFAST TAXAND LTD 75. CHRISTODOULOS DAMIANOU 76. MARIA DAMIANOU 77. ZOE KOKONI

JOANNIDES + CO. 81. LEFKIOS J. JOANNIDES

FOUNDER AND MANAGING DIRECTOR

Joannides + Co is one of Cyprus’ most highly regarded public accountancy firms with offices in Nicosia, Larnaca and Limassol.

DIRECTORS

Voted ‘Cyprus Tax Firm of the year 2011’ by the International Tax Review, Eurofast Taxand offers services in international and indirect tax, transfer pricing, M&A, real estate, and debt and equity structuring.

GRANT THORNTON (CYPRUS) LTD 78. STAVROS IOANNOU

K. TREPPIDES & CO LTD 82. KIKIS TREPPIDES MANAGING DIRECTOR

In business since 1985, K. Treppides & Co has become an excellent service provider for international companies.

CHIEF EXECUTIVE OFFICER

KPMG LTD 83. ANDREAS K. CHRISTOFIDES

As a member of Grant Thornton International, the firm provides audit, tax and advisory services to private businesses, public companies, multinationals and government agencies.

Part of the wider international KPMG group, KPMG in Cyprus provides audit, tax and advisory and industry insight services.

MANAGING DIRECTOR

CHIEF EXECUTIVE OFFICER

MOORE STEPHENS STYLIANOU & CO. 84. GEORGE STYLIANOU

Ranked among the largest accounting and advisory organisations in Cyprus, HLB Afxentiou Ltd is a member Firm of HLB International, a worldwide organisation of accounting firms and business advisers.

The international group Moore Stephens is represented in Nicosia and Limassol with a focus on both local and global clients. Client sectors include media, shipping, and Insurance.

HLB AFXENTIOU LTD 79. COSTAS A. AFXENTIOU

MANAGING PARTNER

PWC CYPRUS HOWARTH DSP LIMITED 80. IOANNIDES DEMETRIADES 85. EVGENIOS EVGENIOU CHIEF EXECUTIVE OFFICER MANAGING DIRECTOR

Established in 1987, Horwath DSP Limited is a professional services firm offering audit, tax, risk and advisory solutions to a diverse clientele throughout Cyprus, the region and the world.

Drawing from 161,000 experts in 154 countries PWC Cyprus (formerly PricewaterhouseCoopers Cyprus) focuses on the provision of assurance, advisory, tax and global compliance services.

FIDUCIARY/ CORPORATE SERVICES

ABACUS 86. NICOS NICOLAIDES MANAGING PARTNER

Established in 2001 with offices in Nicosia and Limassol, Abacus offers solutions and expert advice in areas such as fiduciary, trust, and accounting services.

AJK GROUP 87. ANDREAS KARAPATAKIS

CHAIRMAN

AJK Group provides services in the fields of corporate and financial consulting, formation and administration of companies, foundations and trusts, fiduciary services and wealth administration services.

ALPHA CAPITAL HOLDINGS CYPRUS LTD 88. PAVEL NAZARIAN CHAIRMAN

89. ANDRIY GLAVATSKYY

MANAGING DIRECTOR

Alpha Capital provides local and international clients with services in the areas of movable assets and shares in collective investment schemes, stock market titles, futures, interest rates, foreign exchange, and equity swaps and options.

George Kourris

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Evgenios Evgeniou

Andreas K. Christofides

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George Savvides

ASPEN TRUST GROUP 90. ANDREAS ATHINODOROU FOUNDER AND CHIEF EXECUTIVE OFFICER

The Aspen Trust Group offers an integrated range of professional services to provide r corporate and private clients with international tax management solutions tailored to their business and private needs.

BONALBO 91. NICHOLAS LARCOS 92. SAVVAS CHARALAMBOUS

MERIDIAN TRUST 98. MARIA SAVERIADOU MANAGING DIRECTOR

Meridian Trust Corporate and Fiduciary Services provides a range of company registration services, tax-planning and related corporate services for companies that operate in Cyprus as well as in other offshore jurisdictions.

ONE WORLD 99. GEORGE PHILLIPIDES FOUNDER & CHAIRMAN

A significant proportion of One World’s business is in corporate registration and adminisDIRECTORS tration services, the creation and administraBonalbo offers services and solutions in the tion of trusts, international tax advice, VAT areas of corporate, trust, accounting, tax services and customs, and valuations. Its affiliate firm and online gaming.

One Plus Capital provides a wide range of investment and portfolio management services.

CONSULCO 93. MARIOS HAJIROUSSOS 94. DMITRY KHENKIN 95. ELENA HAJIROUSSOU MANAGING DIRECTORS

MANAGING DIRECTOR

101. ROBERT KORBIJN

Consulco specializes in the combination of international tax planning and related corporate services. Offering multidisciplinary services, Consulco’s departments include lawyers, accountants, economists, tax specialists, bankers and finance professionals.

DIRECTOR

FIDUCENTER (CYPRUS) LTD 96. GEORGE SAVVIDES

TOTALSERVE 102. PETER G. ECONOMIDES

As an independent provider of corporate, fiduciary and domiciliation services, Fiducenter has a presence in Luxembourg (head office), Cyprus and Singapore.

With a total of 250 employees, Totalserve provides consultancy services in the areas of international tax planning, corporate services, international trusts, management & administration, shipping and shipmanagement.

MANAGING DIRECTOR Andreas Athinodorou

ORANGEFIELD FIDELCO 100. CONSTANTINOS ECONOMIDES

IFG INTERNATIONAL TRUST 97. CHRISTOS MICHAEL CHIEF EXECUTIVE OFFICER

IFG International Trust services its clients utilising professional advisers to establish and administer a range of internationally structured solutions and management services regarding trusts, companies and foundations.

After the recent merger of Fidelco and the Orangefield Group in the Netherlands, the new firm Orangefield Fidelco specialises in company incorporation and the provision of tax solution services.

CHAIRMAN

TRIDENT TRUST 103. PETROS LIVANIOS MANAGING DIRECTOR

With 34 offices in 24 jurisdictions worldwide, Trident Trust offers clients access to a range of services that extends from traditional corporate domicile representation to the administration of complex trust and fund structures.

Petros Livanios

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Group publishes the island’s biggestselling daily newspaper (Phileleftheros) and the English-language Cyprus Weekly and 12 magazines and operates 2 radio stations. It also owns a major printing plant and is a major shareholder in the island’s biggest press distribution agency.

MEDIA ANTENNA TV 104. LOUKIS PAPAPHILIPPOU CHAIRMAN

Loukis Papaphilippou founded the law firm L. Papaphilippou & Co in 1963 and he has served as President of both the Nicosia Bar Association (1982-1988) and the Cyprus Bar Association (1988-1994). He has been Chairman of Antenna TV, one of Cyprus’ leading television stations, since its establishment in 1989.

DIAS GROUP/IMH 105. GEORGE MICHAIL MANAGING DIRECTOR

The Dias Group is the island’s largest Media Group, managing Sigma Television, 4 radio stations and the Sigmalive online portal, publishing several monthly and weekly magazines, including Madame Figaro, Time Out Cyprus and IN Business, and 2 newspapers (Simerini and City Free Press). He is also Managing Director and a co-founder of IMH, the leading business information, knowledge and skills transfer company in Cyprus, which also publishes Gold.

PHILELEFTHEROS MEDIA GROUP 106. NICOS PATTICHIS

CHIEF EXECUTIVE OFFICER

Founded over half a century ago, the

BANKING & FINANCE

ALPARI FINANCIAL SERVICES LTD 107. ANDREY DASHIN FOUNDER

108. OLGA RYBALKINA

CHIEF EXECUTIVE OFFICER

Alpari Financial Services Ltd (Alpari FS) is a Cyprus-based company providing online financial services as part of the international Alpari Family of Companies.

ALPHA BANK CYPRUS LTD 109. GEORGE GEORGIOU MANAGING DIRECTOR

Alpha Bank made its appearance in Cyprus in 1998 with the acquisition of Lombard Natwest Bank. It was renamed Alpha Bank Limited and later Alpha Bank Cyprus Ltd which is wholly owned by Alpha Bank Group Company.

BANK OF CYPRUS GROUP 110. ANDREAS ELIADES

GROUP CHIEF EXECUTIVE OFFICER

Founded in 1899, the Bank of Cyprus Group is a leading Cypriot banking and financial services group employing over 11,000 staff worldwide.

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Andrey Dashin

BARCLAYS 111. EVAN GAVAS COUNTRY DIRECTOR

Barclays, a branch of Barclays plc, offers wealth management and international corporate banking services under the direction of Evan Gavas.

CDB BANK 112. KYRIACOS IACOVIDES CHIEF EXECUTIVE OFFICER

Founded in 1963, the Cyprus Development Bank (CDB Bank) is one of the island’s primary financial institutions, dedicated primarily to the needs of business clients.

CENTAUR FINANCIAL SERVICES LIMITED 113. GEORGE PSOMAS MANAGING DIRECTOR

Centaur Financial Services is a Cyprus-based fund management group, providing discretionary portfolio management services to High Net Worth Individuals, institutions and mutual funds in Cyprus and abroad.

CENTRAL BANK OF CYPRUS 114. ATHANASIOS ORPHANIDES GOVERNOR

Athanasios Orphanides has been Governor of the Central Bank of Cyprus since May 2007 and a member of the Governing Council of the European Central Bank since January 2008.

Prior to his appointment, he served as Senior Adviser to the Board of Governors of the Federal Reserve in the US.

CISCO LTD 115. ANNA SOFRONIOU GENERAL MANAGER

CISCO (Cyprus Investment and Securities

Anna Sofroniou

Evan Gavas

Makis Keravnos

Corporation Ltd) is a Bank of Cyprus subsidiary that focuses on IPOs, equities and bonds, private placements, mergers & acquisitions, and capital restructuring advisory.

individual clients. Banking lines include international payment services, multi-currency accounts, credit facilities, trade finance and Forex trading facilities.

COOPERATIVE CENTRAL BANK LTD 116. EROTOKRITOS CHLORAKIOTIS

ΗELLENIC BANK 120. MAKIS KERAVNOS

GENERAL MANAGER

The Cooperative Central Bank (CCB) was established in 1937 with the purpose of providing banking and other ancillary services to member cooperative societies which formed the backbone of the agricultural community of Cyprus. Today the CCB offers a wide range of banking services.

EMPORIKI BANK 117. MARIA DIONYSSIADES CHIEF EXECUTIVE OFFICER

Initially established in 1993 as Commercial Bank of Greece (Cyprus), it changed its status to that of a subsidiary of the Emporiki Bank Group in 2001 before becoming part of the French Crédit Agricole Group in 2006.

EUROBANK EFG 118. MICHALIS LOUIS

CHIEF EXECUTIVE OFFICER

Eurobank EFG Cyprus Ltd offers a wide range of products and services in corporate, investment, private and international business banking.

FEDERAL BANK OF MIDDLE EAST (FBME) 119. FADI SAAB

CHIEF EXECUTIVE OFFICER

Former Finance Minister Makis Keravnos heads the Hellenic Bank Group which commenced operations in 1976 and now operates a network of around 70 branches in Cyprus and 20 in Greece, employing over 2,000 people.

LAIKI BANK

121.

CHRISTOS STYLIANIDES CHIEF EXECUTIVE OFFICER

Laiki Bank (formally Marfin Laiki Bank) operates in 10 countries, mainly in Europe, Russia and China, and focuses on retail, corporate,and international business banking, along with wealth and asset management.

NATIONAL BANK OF GREECE (CYPRUS)

122.

NICHOLAS BEIS

MANAGING DIRECTOR

Established in 1841, the National Bank of Greece is the oldest and largest Greek bank. It has a dynamic international profile and has been present in Cyprus for over 100 years.

PIRAEUS BANK

123.

CONSTANTINOS LOIZIDES

CHIEF EXECUTIVE DIRECTOR

MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER

FBME Bank offers commercial banking services and products to corporate and

In 2007, Piraeus Bank Group acquired the branch network operated by Arab

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Bank in Cyprus and set up Piraeus Bank (Cyprus) Ltd which operates two IBUs as well as its retail branches.

RENAISSANCE SECURITIES (CYPRUS) LIMITED

124.

MARIOS HADJIYIANNAKIS DIRECTOR

Renaissance Securities focuses on mergers and acquisitions, equity and debt financing, IPOs, and structured finance products. It also provides brokerage and trading services for equity derivatives and structured products, fixed income instruments, exchange traded funds and more.

RUSSIAN COMMERCIAL BANK

125.

KIRILL A. ZIMARIN

CHIEF EXECUTIVE OFFICER

A member of the VTB Group, Russian Commercial Bank (Cyprus) is the leading Russian international financial services group with a presence in more than 20 countries. It has operated in Cyprus since 1995 and has branches in Nicosia and Limassol.

SFS GROUP

126.

CHRISTODOULOS ELLINAS

CO-FOUNDER, CHAIRMAN & CHIEF EXECUTIVE OFFICER

SFS Group (formerly Sharelink Financial Services) is one of the largest non-banking financial groups in Cyprus and is actively engaged in shipping, real estate, capital markets, venture capital and private equity.

SOCIÉTÉ GÉNÉRALE BANK

127.

MICHEL PECHEUR

GENERAL MANAGER

In 1985, Société Générale Bank was one of the first International Banking Units to settle in Cyprus. Today, Société Générale Bank – Cyprus operates as a fully-fledged local bank with branches throughout the island.

TFIFX

128. LOUCAS

MARANGOS

CHIEF EXECUTIVE OFFICER

Loucas Marangos worked for the Corporate Division of the Bank of Cyprus before joining TFI PCL, one of the pioneers of currency trading in Cyprus. In

2009 the company founded TFI Markets, of which TFIFX is the trade mark. The TFIFX trading platform provides access to foreign exchange markets and CFDs on stock indices.

USB BANK

129.

ANDREAS THEODORIDES CHIEF EXECUTIVE OFFICER

USB Bank provides financial solutions in the areas of commercial and private banking services as well as Bancassurance for retail, corporate and high net worth market segments.

ENTERPRISE AEOLOS 130. SOTOS STEPHANOU MANAGING DIRECTOR

Aeolos, a private limited partnership consisting of Francoudi & Stephanou and the TUI Group, operates in a wide spectrum of travel fields. Sotos Stephanou and his two brothers, Hermes and Stephanos are on the Board of Francoudi & Stephanou. The other two are Managing Director and Marketing Manager respectively of PrimeTel PLC (see separate entry).

ALKIS H. HATZIKYRIACOS (FROU FROU BISCUITS) PUBLIC LTD 131. ALKIS HATZIKYRIACOS CHAIRMAN & MANAGING DIRECTOR

The company, established in 1964, is a leading producer and distributor of a large variety of biscuits, crackers and wafers.

ARISTO DEVELOPERS GROUP 132. THEODOROS ARISTODEMOU CHAIRMAN & MANAGING DIRECTOR

Established in the early 1980s, Aristo Developers is one of the largest private landowners and development companies in Cyprus. Theodoros Aristodemou, founder of the Group, is also Chairman of Bank of Cyprus.

PAPAELLINAS GROUP OF COMPANIES 133. CHRISTOS PAPAELLINAS CHIEF EXECUTIVE OFFICER

C.A.Papaellinas & Co Ltd was established in 1930 and has since become one of the leading and most reputable distribution companies in Cyprus. Initially formed as a pharmaceutical importer/distributor it expanded into con-

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COVER STORY

sumer and cosmetic products during the 60s and 70s. The Group comprises the original company and its affiliates.

CHAR. PILAKOUTAS GROUP 134. CHARALAMBOS PILAKOUTAS

GALATARIOTIS GROUP OF COMPANIES 138. GEORGE GALATARIOTIS 139. COSTAS GALATARIOTIS EXECUTIVE CHAIRMEN

MANAGING DIRECTOR

Established over 60 years ago, Char. Pilakoutas holds a leading position in Cyprus’ motor trade, dealing in prestige marques such as BMW and Jaguar.

COSMOS TRADING LTD 135. GEORGE PETRIDES

George Galatariotis is Executive Chairman of the Cyprus Cement Public Company Ltd, K+G Complex Public Company Ltd and C.C.C. Holdings & Investments Public Company Ltd. Costas Galatariotis is Executive Chairman of C.C.C. Tourist Enterprises Public Company Ltd., and Honorary Consul General of Japan in Cyprus.

GEO. PAVLIDES & ARAOUZOS LTD / HULL BLYTH ARAOUZOS LTD 140. SPYROS G. PAVLIDES

EXECUTIVE CHAIRMAN

136. VASSILIS PETRIDES

CHIEF EXECUTIVE OFFICER

Established in 1957, Cosmos Trading is one of the oldest and best established food distribution companies in Cyprus. The Petrides family acquired Cosmos in 1993 and merged it with its own operations which focused on tobacco and spirits.

DIRECTOR

One of the oldest family companies, Geo. Pavlides & Araouzos Ltd is engaged in the import and distribution of motor vehicles and pharmaceuticals, It is the Cyprus representative of Pfizer, among others. The company also deals in shipping, travel and tourism through its sister company, Hull Blyth Araouzos Ltd.

CYPRUS PHARMACEUTICAL ORGANIZATION LIMITED (CPO) JOANNOU AND PARASKEVAIDES 137. COSTAS A. PAPAELLINAS (OVERSEAS) LTD CHIEF EXECUTIVE OFFICER 141. CONSTANTINOS The Cyprus Pharmaceutical Organization Limited (CPO) is a leading importer, distrib- SHACOLAS utor and exclusive agent for a wide variety of products ranging from consumer products, perfumery and cosmetics, to pharmaceutical products, hospital, medical, analytical, dental supplies and surveying instruments.

Dimos Mouskis

GENERAL MANAGER

Joannou & Paraskevaides (Overseas) Limited was established in 1961 and is a leading international building, civil and electromechanical engineering contractor with a strong involve-

Phanos Epiphaniou

ment in the energy (oil and gas) and industrial sectors operating in the Middle East, North Africa, Europe and Asia.

LANITIS GROUP OF COMPANIES 142. PLATON E. LANITIS CHAIRMAN

143. COSTAS LANITIS 144. MARIOS LANITIS

EXECUTIVE DIRECTORS

The company was established in 1952 under the name Lanitis N & E Estates Ltd. and later renamed Lanitis E.C Holdings Ltd. The main companies of the Group are N.P. Lanitis Ltd, Lanitis Farm Ltd, Amathus Public Ltd, Cybarco Plc, Heaven’s Garden Ltd and Lanitis Farm Golf Ltd.

LEPTOS GROUP 145. MICHAEL LEPTOS CHAIRMAN

The Leptos Group is a leading group in land development in Cyprus. Major companies owned by the Leptos Group include Armonia Estates Ltd, Pandora Investment Ltd, Leptos Calypso Hotels, Leda Travel, Vesta Holidays, and Arena DMC

LOUIS GROUP OF COMPANIES 146. COSTAKIS LOIZOU EXECUTIVE CHAIRMAN

The Louis Group was established in 1935 by the late Louis Loizou, known as “the father of Cyprus Tourism”. It is now one of the leading travel, tourism, cruising, hotel and

Alkis Hatzikyriacos

Andreas Pittas

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catering groups in the Mediterranean and the largest private sector employer in Cyprus.

M.S. JACOVIDES GROUP 147. SOTOS JACOVIDES 148. ARIS JACOVIDES

N.K. SHACOLAS (HOLDINGS) LTD 155. NICOS SHACOLAS GROUP EXECUTIVE CHAIRMAN

N.K.Shacolas (Holdings) Ltd controls and manages the operations of Cyprus Trading Corporation plc, which owns a portfolio of companies including Woolworth (Cyprus) MANAGING DIRECTORS Properties, ITTL Trade Tourist & Leisure Park Founded in 1944 as a pharmacy business in plc, Cyprus Limni Resorts & GolfCourses plc posi- and Ermes Department Stores plc.

Nicosia, the MSJ Group enjoys a leading posi tion and prominent status in the healthcare markets in Greece and Cyprus. In recent years, the company has also expanded its activities to Southeast Europe.

MEDOCHEMIE 149. ANDREAS PITTAS EXECUTIVE CHAIRMAN

Established in 1976 by Dr Andreas Pittas, Medochemie has become a major internainternational generic pharmaceutical manufacturer.

Headquartered in Cyprus, the company manufactures a wide range of products at its nine manufacturing facilities.

MPM GROUP 150. PETROS MICHAELIDES MANAGING DIRECTOR (MPM GROUP)

151. NINO MICHAELIDOU

MANAGING DIRECTOR (HOUSE OF BEAUTY)

Wholly-owned by the Michaelides family, the Group imports, distributes and markets a wide range of cosmetics, foodstuffs, film and digital consumer products, fashion items and accessories and dental products.

MUSKITA HOLDINGS LTD 152. CHRISTOS MOUSKIS CHAIRMAN

153. DIMOS MOUSKIS

CHAIRMAN (MUSKITA ALUMINIUM INDUSTRIES)

154. GLAFKOS MOUSKIS

CHAIRMAN (ATHENS HOTEL COMPANY)

The group, controlled by three brothers, is active in the aluminium, hotel and real estate sectors and active in the UK Cyprus and Greece.

PETROLINA (HOLDINGS) PUBLIC LTD 156. DINOS LEFKARITIS EXECUTIVE DIRECTOR FINANCE

157. MARIOS LEFKARITIS

DIRECTOR

The company markets motor, industrial, domestic, marine and aviation fuels, Liquefied Petroleum Gas (LPG), lubricants, greases and other related products within Cyprus.

Marios Lefkaritis is known internationally as Vice-President and Treasurer of the Executive Committee of UEFA.

PHANOS N. EPIPHANIOU LTD 158. PHANOS EPIPHANIOU CHAIRMAN & MANAGING DIRECTOR

Phanos N. Epiphaniou is one of the largest trading groups in Cyprus, supplying the building, construction and manufacturing industries with materials, products and services.

PHOTOS PHOTIADES DISTRIBUTORS LTD 159. PAVLOS PHOTIADES

MANAGING DIRECTOR (PHOTOS PHOTIADES BREWERIES)

160. ALEXIS PHOTIADES

MANAGING DIRECTOR (PHOTOS PHOTIADES DISTRIBUTORS)

Formed in 1995, Photos Photiades Distributors is now a leading sales and marketing company in the Cypriot beverage industry. It sells, distributes and markets locally-produced group products including Carlsberg and Leon beer, Agros and Vitalia water together with the range of Diageo products.

PRIMETEL PLC 161. HERMES STEPHANOU MANAGING DIRECTOR

162. STEPHANOS STEPHANOU

MARKETING MANAGER

Two of the three Stephanou brothers head one of the island’s newest and most successful telecom companies. The third brother, Sotos, Stefanou is Managing Director of Aeolos Travel. All three are on the Board of Francoudi & Stephanou.

QUANTUM CORPORATION & PPC-QUANTUM ENERGY 163. ATHANASIOS KTORIDES CHAIRMAN

Ktorides heads PPC-Quantum Energy, whose latest ambitious project is the EuroAsia Interconnector that will link Israel, Cyprus and Greece via a submarine electricity cable.

TSERIOTIS GROUP OF COMPANIES 164. PANDORA TSERIOTIS DIRECTOR, UNICARS LTD & EXECUTIVE DIRECTOR, P.M. TSERIOTIS LTD

165. ANNA DIOGENOUS

TSERIOTIS

MANAGING DIRECTOR P.M. TSERIOTIS LTD

The Tseriotis Group is one of the largest and oldest corporate entities in Cyprus with operations in both Cyprus and Greece. Its activities cover automotive products and services, sales and distribution of fast moving consumer goods, insurance services, manufacturing of detergents, cleaning and personal care products and information technology.

VASSOS ELIADES LTD 166. GEORGE ELIADES 167. KYPROS ELIADES

MANAGING DIRECTORS

One of the largest trading companies in Cyprus, its main activities being the importation, sale and distribution of foodstuffs, alcoholic beverages, mass market consumer goods, luxury watches, jewellery and accessories as well as fitness equipment.

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Your business and tax advisers in Cyprus We help you stay ahead of the competition

Deloitte is one of the largest private professional services organisations worldwide. With over 500 professionals locally and with the support of the 182.000 professionals around the globe, Deloitte in Cyprus provides audit, tax, consulting, financial advisory, wealth management and other support services to local and international business companies.

Discover why so many leading companies of all sizes, private and public, rely on us as their business and tax advisers year after year.

www.deloitte.com/cy

Š2012 Deloitte Limited

special report

LOCAL PRIVATE

BANKING Comes of Age PRIVATE BANKING AND WEALTH MANAGEMENT SERVICES ARE NOW AVAILABLE TO THOSE WHO NEED THEM IN CYPRUS By Costa Ioannides

T

family corporations, trusts, and other issues relating to estate planning; ime is precious to all of us but for seriously and tax specialists to prepare reports and returns and offer advice on the wealthy, financially successful individuals it can be an even rarer commodity, which is why many taxation aspects of the client’s estate.

Clients who opt for discretionary services effectively assign their finances of them seek to save it by placing their banking and investment concerns in the capable hands of to the bank to manage. Based on certain pre-determined criteria, the bank will make investment decisions (usually through its Asset trusted specialists. This is where private banking Management division) on behalf of the client and assume responsibilcomes into play and sets itself apart from run-ofity for protecting and growing its client’s wealth. By contrast, the term the-mill retail banking services. ‘non-discretionary’ means that, while receiving advice from the bank, The minimum net-worth benchmark to qualify for private banking serthe client is responsible for the ultimate decision-making. vices is typically €1 million (excluding the value of the client’s primary place of residence). In return for entrusting a bank’s private banking division with the responsibility for managing significant amounts of wealth, clients have at their disposal specialised banking resources to manage their assets, encompassing services dealing with investment, In the wake of continued growth in foreign currency deposits, the credit, wealth-structuring (such as trusts, estate and succession planevolution and financial success of local business people and the ning, cross-border tax solutions, etc.) and personal banking issues. The influx of international businesses and High Net Worth Individuals key time-saving element of private banking is that clients are assigned (HNWIs) to the island, banks in Cyprus began to respond to their a single point of contact, their private banker and, as services become clients’ need to access private banking services locally rather than more tailored over time, the private banker works as the main facilitator obliging them to seek private bankers in traditional offshore banking within (and sometimes outside) the respective organisation to ensure hubs such as Switzerland, Monaco or Luxemthat each of the client’s financial needs are being bourg. Cyprus-based banks are now in a position managed by an appropriate specialist in that field.

THE MINIMUM to offer a world-class level of private banking NET-WORTH services, enabling the island to combine an enviBENCHMARK TO able lifestyle in the sun with premium business and financial services support.

Wealth management is a form of private banking QUALIFY FOR the following pages the leading providers of but it goes further in that it delivers a more comPRIVATE BANKING On private banking and wealth management services prehensive, financial management service. A wealth SERVICES IS in Cyprus present the services with which they management package can include brokers who are TYPICALLY €1 cater to the needs of local and international empowered to buy and sell on behalf of the client’s HNWIs and business people. investment portfolio; lawyers to help structure MILLION

WEALTH MANAGEMENT

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

PRIVATE BANKING AND WEALTH MANAGEMENT IN CYPRUS

Limassol Marina

SPECIAL REPORT

BANKOF Cyprus

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he Bank of Cyprus is the leading banking and financial services institution in Cyprus, with a presence in seven countries and representative offices in five more. Rising to the challenge of offering high quality wealth management services, the Bank’s Private Banking Division has evolved into a fully-fledged private wealth management unit through which it provides the complete range of investment, banking and ancillary services to its High Net Worth clients.

As part of an organisation known for its client-oriented values, we at Bank of Cyprus Private Banking thrive on building longterm relationships with our clients. We have adopted a holistic approach, which means that our clients are serviced by a team of banking and investment professionals, while a dedicated relationship manager maintains daily contact with them. Through an interactive relationship, we assess and constantly monitor each client’s risk profile, banking and investment needs in an effort to offer a truly bespoke service.

We offer execution, advisory and discretionary management services across all products and asset classes. Our clients can work with us on one or a combination of these services: Execution only: This service is typically offered to more experienced clients who prefer to make their own investment decisions.

Advisory: For clients under the advisory service, a risk-adjusted portfolio is created, taking into consideration a number of factors such as the client’s risk appetite, investment profile, investment horizon and financial circumstances, current market

conditions, etc. Advisory portfolios are continuously monitored and adjusted to ensure that they are always in line with the client’s profile and investment objectives and with the team’s investment strategy.

Discretionary: Discretionary services are offered to clients who seek active asset allocation with virtually no involvement in the management of their assets. To ensure the best possible service levels, discretionary portfolios are dynamically managed by a dedicated team whose sole responsibility is the management of these portfolios.

All solutions offered under our advisory and discretionary services are based on extensive research and market analysis, and conform to the Bank’s Investment Strategy which is produced quarterly and reviewed on a daily basis by a dedicated Investment Strategy team.

It should be noted that all the aforementioned services are also offered to Institutional investors through an experienced and highly specialised Institutional Wealth Management team, to ensure the best possible quality of service.

Our clients can benefit by utilizing our open architecture platform, through which we offer access to some of the most renowned fund management firms such as JPMorgan, UBS, Franklin Templeton, etc. This translates to a truly global offering and, most importantly, enables us to offer the most appropriate investment solutions to each of our clients, while minimising risk.

The events of the last four years have shown that excessive returns are not sustainable and often come with unwarranted – or even hidden – risks. At Bank of Cyprus Private Banking we aim to offer clients simple solutions that achieve the right balance between risk and return so as

to grow, protect and transfer their wealth to the next generation. Despite these turbulent times, our reputation and good track record have allowed us to expand our product offering, our services, our team and, most importantly, our assets under management.

The high quality level of service offered by the Private Banking Division of Bank of Cyprus has also been recognized through the ‘Best Private Bank in Cyprus’ award which we recently received from the internationally acclaimed EUROMONEY magazine. This accolade classifies the Bank among the leading financial institutions offering Private Banking services and confirms the success of our strategy with regard to offering bespoke solutions and integrated products and services in the areas of wealth management.

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contact details Bank of Cyprus Private Banking: e-mail: Info@prb.bankofcyprus.com, Website: www.bankofcyprus.com Nicosia 4, Evrou Street Eurolife House, 1st Floor 2003 Strovolos Tel: (+357) 22121881 Fax: (+357) 22340015 Limassol 66-68 Archbishop Makarios III Avenue, Delamera Building, 3rd Floor Mesa Geitonia 4003 Limassol Tel: (+357) 25156512 Fax: (+357) 25731858 Larnaca 45, Archbishop Makarios III Avenue, Panayides Eurohouse, 3rd Floor 6017 Larnaca Tel: (+357) 24144426 Fax: (+357) 24650119

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SPECIAL REPORT

BARCLAYS A Wealth of Expertise

B

arclays is a leading global wealth and investment manager providing international and private banking, wealth planning, trust and fiduciary services, investment management, brokerage services and research to private and intermediary clients around the world.

Barclays is committed to meeting the needs of wealthy clients and to supporting those aspiring to grow their wealth. We understand that wealth is more than money; it means something different to everyone.

With a presence in Cyprus for over 70 years, Barclays has a tremendous heritage on the island. Having successfully steered through the challenges of the financial crisis, Barclays Cyprus is well positioned

to meet the increasingly sophisticated and demanding needs of its international corporate and high net worth clients.

For those clients looking for investment opportunities, Barclays provides a robust and mature investment offering. Our team in Cyprus can provide clients with access to Barclays’ global investment capabilities.

Barclays’ investment service offering includes: • Execution Only Trading – Clients benefit from access to sophisticated execution platforms and traders to ensure their execution decisions are routed to market effectively. Through this service clients do not receive any ongoing investment advice.

• Risk Management and Hedging Solutions – Through the use of such solutions, clients seek to protect the future value of either an asset or liability. Such solutions are of great importance in the current market conditions.

• Cash Management and Yield Enhancement Advisory Solutions – Clients benefit from interest bearing products, along with medium term movements in interest rates and currencies.

• Advisory Brokerage – Seeking to get exposure in equity and fixed income instruments focusing on overall portfolio growth and/or providing income. This service has been designed to provide clients with a dedicated specialist sales-trader, who can offer recommendations on a range of investment ideas to complement any existing strategic positions or favoured instruments already held.

• Discretionary Investment Management – Our Investment Managers manage, on behalf of the client, their portfolio to meet the investment aims within the client’s risk tolerance.

• Non Discretionary Investment Management – Our Investment Managers offer advice to the client but the client makes all decisions relating to investments – this will involve regular contact with the client from Investment Management professionals steeped in daily market activity with a series of recommendations and ongoing advice to meet client’s investment aims.

• Structured Investment Solutions – Clients have access to both standardised and tailor-made structured investment products designed to meet their risk-reward requirements. Barclays offers advice to clients on our different investment products.

• Market Information – Clients can access the market insight of the specialist Barclays sales-trading teams which includes market commentary, and updates on the latest debt new issues and equity IPOs as they reach the market.

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There are a number of considerations for clients who are looking to invest. In light of ongoing market volatility, some investors are understandably hesitant about investing in risky assets. Also, some are focused on the risk of economic conditions deteriorating even further. However, in addition to the risks of being in the market, investors need to think about the risk of being out of the market, or selling at the bottom. Learning about your financial personality and how to control your emotional response to volatile markets can help investors take advantage of an anxiety premium. At Barclays we have developed a market leading approach which allows us to see multiple aspects of a client’s personality and construct a portfolio which is unique to them. Investors can now access the latest thinking in behavioural finance via a new microsite. This interactive and enlightening platform enables visitors to experience for themselves how emotion drives their investment decisions and provides access to a rich source of material in one place, including articles and blogs from the entire behavioural finance team.

To access this new site, visit: http://www. investmentphilosophy.net/ Barclays has offices in both Nicosia and Limassol with highly skilled local and international staff offering world class Corporate Banking and Investment Management services to the Cyprus market. We work closely with experts and specialists from the Barclays Group including Private Banking, Stockbrokers and Investment Banking. As a gateway to Barclays unparalleled geographic network and specialists we have access to economic and investment research and intellectual capital in order to best support our clients.

In Cyprus, we have an on-site Treasury Team with access to London and global FX trading desks as well as fully qualified Trade Finance team and a wide offering including Letters of Credit, Guarantees and Bid Bonds. We provide same day value for inward and outward payments with a highly competitive pricing and fee structure e.g. flat fee payments. Our Cash Management Specialist can advise on advanced cash management capabilities for Corporates e.g. bulk file automated payments and our world class internet banking capabilities for automated straightthrough processing of transactions.

One of the largest global banks, trusted by 49 million customers, Barclays remains secure, strong and independent and the only A Rated* Bank in Cyprus. Barclays capital position has more than doubled since the end of 2007 and in July 2011 Barclays passed the European Banking Authority’s rigorous multi-year stress test with a stressed capital ratio significantly above the regulatory minimum. This robust level of capital as well as strong liquidity and funding positions will help the Group to be well prepared for future regulatory requirements and we continue to engage constructively with international regulators as policy proposals are developed. We believe that recent economic turmoil has shown

universal banking to be the most robust model in financial services and throughout the crisis Barclays has remained profitable. Through successful management of risk and capital, we are conservatively positioned, well capitalised, and well placed to grow our franchise across a diverse portfolio of businesses.

Our working hours are 08.30 to 17.00 (Monday to Friday) with extended coverage from the UK for transactional queries and support. * Standard and Poors rating.

For further information, please contact: Deborah Page (+357) 22654474 or (+357) 97771718.

contact details Director: Evan Gavas Headquarters address: UK Head Office: 1 Churchill Place, London, E14 5HP. Cyprus Main Office: 2nd & 3rd Floors, 88 Dighenis Akritas Avenue, Nicosia Postal address: P.O. Box 27320,1644 Nicosia, Cyprus Tel: Nicosia Office (+357) 22654474 Tel: Limassol Office (+357) 25208000 Fax: (+357) 22875625 e-mail: cyprus.enquires@barclays.com Website: www.barclays.com/wealth or www.barclayswealth.com/institutionsintermediaries/financial-intermediaries/multijurisdictional-banking/cyprus.htm

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SPECIAL REPORT

Eurobank EFG

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urobank EFG Cyprus started its operations in August 2007 with the opening of its first Banking Centre in Nicosia and currently operates a network of seven Banking Centres in all major cities of the island. Applying a different approach and strategy from its competitors, Eurobank EFG Cyprus focuses entirely on Wholesale Banking Services

THROUGH THE SEGMENTS OF:

• Corporate and Ιnvestment Βanking • International Business Banking • Private Banking and Asset Management • Global Markets (Treasury Sales)

Eurobank EFG Cyprus is a crucial ally in accomplishing its clients’ financial and business objectives, offering a superior service that is timely, flexible and customised.

Despite the benefits obtained by the Group’s extensive international network and its open product architecture strategy, the touchstone of Eurobank EFG Cyprus’ success is its commitment to Relationship Management.

Within its four years of operation, the Bank has grown at an impressive pace

and has succeeded in becoming one of the largest banks in Cyprus while, at the same time, demonstrating extremely healthy profitability.

PRIVATE BANKING

The guiding principle of Private Banking at Eurobank EFG Cyprus is establishing and maintaining a long and trusting relationship with clients. Each Private Banking client has a dedicated and highly trained Relationship Manager, who is stringently vetted to ensure his/her in-depth knowledge of the marketplace and is the liaison between the client and the specialized business units of the Bank.

Total Wealth Management Services are offered to clients based on their individual needs and objectives. High quality services, innovative products and a culture of professionalism, trustworthiness and discretion, have been the hallmarks of our success. Proof of the high level of service provided, and of the constant effort applied to maintain and improve the Bank’s performance, lies in the two consecutive ‘Best Private Bank in Cyprus” Awards from Euromoney Magazine in 2010 and 2011, won after only a few years of operation in the Cyprus market.

Eurobank EFG Cyprus Private Banking aims to offer comprehensive services for the management of its clients’ assets, serving their banking and investment needs by providing: • Banking and investment products • Strategically diversified portfolios of top-rated products and services • Efficiency in the provision of tailormade solutions • Flexibility in the development of inhouse products • Open architecture strategy of investment products • Through the offering of brokerage, advisory and discretionary Asset Management Services, Eurobank EFG Private Banking provides clients with flexibility in allocating their assets to all three types of investment services for different parts of their portfolio.

CLIENTS HAVE ACCESS TO:

• Local and international stock markets, sovereign and corporate bonds.

• International mutual funds through strategic cooperation with prime fund management providers • Alternative investment products • Structured products • Currency products • Derivatives/ CFDS (Contract for difference)

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SPECIAL REPORT

FBME

Bank F BME is a commercial Bank with extensive international banking experience in Europe, Africa and the Middle East. The Cyprus branch was established in 1982, which makes FBME one of the island’s longest standing international banks.

FBME’s geographically diverse client base consists of international companies and individuals from over 50 countries.

The management team is well-versed in international business and has extensive practical experience in the financial services industry. FBME carefully selects its management, staff and partners, enabling it to offer clients the highest standards of care, confidentiality and integrity.

FBME is committed to listening, delivering customised solutions and developing close relationships with its clients, whilst maintaining utmost discretion.

INVESTMENT SERVICES

FBME began offering Investment Services to its clients in 2011 to serve its large base of High Net Worth Individual clients who are seeking noncash alternatives to deploy their wealth.

Remaining loyal to our mission which is “to develop and grow in partnership by providing customised banking solutions for our clients” we began offering these services, always focusing on our clients’ needs. Our approach to clients and their business is at the root of our strengths.

We believe that a great bank is one that makes its clients feel special and we endeavour to foster that feeling.

BROKERAGE SERVICES

The Bank is licensed by the Central Bank of Cyprus to provide execution only Investment Services (reception and transmission of orders in relation to one or more financial instruments, execution of orders on behalf of clients) for its Cyprus branch clients.

Through our network of counterparties across the globe, we can ensure first-class execution facilities on a vast array of investment products, both exchange traded and over-thecounter (OTC), including: • Equity Shares • Depositary Receipts • Bonds and Other Debt Securities • Money Market Instruments • Structured Products (Synthetic Investment Instruments) • Collective Investment Schemes • Hedge Funds • Exchange Traded Funds • Derivatives

CUSTODY SERVICES

FBME enters into partnerships to create synergy and materialise potential. For this reason, the Bank offers its custody services, in cooperation with a leading global financial institution. The Bank offers the following custody services: • Safekeeping of Securities: Dematerialised and physical titles in collaboration with highly regarded global custodians.

• Settlement of Transactions: Efficient and prompt settlement of transactions.

• Corporate Actions: Dividend and coupon collection, re-investment of dividend, exercise of rights, • Proxy voting and provision of information on corporate actions.

• Reporting: Investment confirmation / redemption confirmation, periodic performance reports periodic statement of transactions, statement of holdings and SWIFT messages.

NEXT MILESTONE

The Bank is planning to offer Investment Advice and Portfolio Management services to its client base, enabling clients to take advantage of a full array of Wealth Management products. Our aim is to be the best in what we do, and we are developing these services with this aim in mind.

THE TEAM

We have a growing team of professionals who have gained their experience in financial markets by working for multinational investment banks in the worlds’ leading financial centres. Their experience and networks allow FBME to provide the best possible quality to its clients through customised solutions in every aspect. FBME values its people, encourages creativity, cooperation and productive competitiveness.

contact details FMBE Bank – Nicosia Branch 90, Archbishop Makarios III Avenue, 1077 Nicosia, Cyprus Tel: (+357) 22888444 Investment Services Desk e-mail: investments@fbme.com Direct Tel: (+357) 22888330 Services are offered subject to the Bank’s terms and conditions.

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SPECIAL REPORT

Hellenic Bank

Private

BANKING

H

ellenic Bank Private Banking is a dedicated and specialised banking service providing access to high-quality investment products and services to High Net Worth Individuals.

A careful evaluation of individual needs and objectives forms the backbone of any suitable investment strategy. Just like any other significant decision, an investment decision is subject to several constraints which make each individual case unique. We aim to facilitate such diverse investment decisions through a wealth of investment solutions and banking services available to our clients.

“All good decisions are based on the quality of choices available and we aim to present you with choice from a diverse universe of opportunities” Hellenic Bank Private Banking offers

Execution and Advisory services through a team of experienced and qualified Private Bankers who implement and monitor investment strategies for clients. Our focus on personal service and confidentiality is the basis on which Hellenic Bank Private Banking clients benefit from traditional and alternative asset classes, supported by a full spectrum of Custodian services.

Complimentary to our investment services we also provide our clients with a full range of high level banking services from loans to credit cards.

• Investment Advice and Portfolio allocation across asset classes • Equity brokerage services in all major international and emerging markets • Fixed Income brokerage services in government and corporate bonds in all major international and emerging markets bond markets • Access to a wide range of Mutual Funds managers in all major currencies and asset classes • Structured products including capital guaranteed instruments

• Lending against portfolios of liquid securities • Term and Fiduciary Deposits • Global Custodianship Kyriakos Attikouris Manager of Private Private Banking e-mail: k.attikouris@hellenicbank.com Tel: (00357) 25502370 Tonia Kallinikou Private Banking Advisor, Limassol Desk e-mail: a.kallinikou@hellenicbank.com Tel: (00357) 22502466 Daniel Antoniou Private Banking Advisor, Nicosia Desk e-mail: d.antoniou@hellenicbank.com Tel: (00357) 22500904 Marina Hadjigeorgi (Russian Speaker) Private Banking Advisor, Nicosia Desk e-mail: m.hadjigeorgi@hellenicbank.com Tel: (00357) 22500903

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SPECIAL REPORT

LAIKI

Laiki PRIVATE BANKING

A

t Laiki Private Banking we provide a full range of personal financial services to High Net Worth Individuals, by becoming their central service point within Laiki Bank Group. We work by creating long-term relationships with our clients, providing tailor-made solutions for both their traditional banking and investment needs. At Laiki Private Banking, we have retained the traditional values of personal service, confidentiality, trust, and discretion throughout the years.

SERVICES

TRADITIONAL BANKING SERVICES

• Deposit solutions in all major currencies • Loans for investment purposes, as well as for other needs such as personal, professional, housing, etc.

• A wide range of credit and debit cards • Escrow accounts • Foreign exchange and currency trading products and services • Bankassurance products • Pension schemes and health plans • Safe deposit services • Electronic Banking in Greek, English, and Russian • Telephone Banking

INVESTMENT ADVISORY SERVICES

A Private Banker manages a client’s banking and investment needs and proposes solutions based on the client’s individual profile and investment needs. Private Bankers are highly qualified and properly licensed and can offer their expertise throughout the relationship.

DISCRETIONARY ASSET MANAGEMENT

Clients have the opportunity to delegate the management of their investment portfolio to an experienced team of asset managers. Portfolios are professionally and rigorously monitored, based on the investment guidelines which are jointly defined with the investors at the start of the relationship and adjusted according to the changing circumstances through the course of the relationship.

CUSTODY SERVICES FOR THE LOCAL AND INTERNATIONAL MARKETS • • • • • • • •

Safekeeping of securities Settlement of trades Information on corporate actions Dividend and income collection Proxy voting Reporting Assistance with tax reclamation Services to Funds (registry, administration, etc.).

• Escrow Agency services • sub-custodian services for the Cyprus market

INVESTMENT PRODUCT OFFERING

Mutual funds and alternative investment solutions

Our range includes our own Group’s funds as well as those of carefully selected associates, covering all main international financial markets, currencies, asset types and management styles, enabling the formulation of an optimal portfolio.

Structured products

Structured products are built in-house or selected through an extensive range from our associated product providers. A wide range of innovative products is offered, built around

international stock market indices, individually selected stocks, conventional or alternative funds, commodities, exchange or interest rates. They can be designed to provide capital security and are often bespoke to meet the strategic demands of specific clients.

Equities & Bonds

Global brokerage services are offered covering all major stock exchanges around the world.

Foreign Exchange and Treasury

Foreign exchange transactions for personal or commercial use are effected in association with the Bank’s treasury, at very competitive rates. Efx trading is an internet-based platform which enables our clients to conduct their buy/sell transactions in foreign currencies or obtain online information about foreign exchange rates.

INVESTMENT STRATEGY, RESEARCH AND PRODUCTS

A team of experienced market researchers, analysts and product developers formulates the scope and rationale behind each investment idea. It also assesses the current macroeconomic environment and financial market conditions, estimates the future path of macroeconomic and microeconomic variables and runs different scenarios in order to construct the optimal portfolio distribution among asset classes (Asset Allocation), in model, as well as tailor-made, portfolios. In-house market research, as well as the research of our selected associates, forms the strategic backbone of our specialised investment proposals and product ideas. Private Banking clients are offered access to this exclusive research and benefit from a continuous flow and evaluation of real-time information on market trends, investment ideas and superior analysis. Also, supporting our Private bankers, in-house meetings and conference calls ensure that the advice offered is of the highest quality.

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SPECIAL REPORT

RUSSIAN

Commercial Bank (Cyprus)

SERVICES

The Russian Commercial Bank (Cyprus) Limited was established on 1 August 1995 as an overseas unit of VTB Bank and a banking licence was issued by the Central Bank of Cyprus. Since the accession of Cyprus into the European Union in 2004, the Russian Commercial Bank (Cyprus) Limited has operated as a fully-fledged European bank.

The Russian Commercial Bank (Cyprus) Limited is a member of the VTB Group, a leading international financial services group of Russian origin with its business presence in more than 20 countries. The holding company of

the Group is VTB Bank Plc, one of the leading Russian banks, with the Russian government being the majority.

The Russian Commercial Bank (Cyprus) limited is the only subsidiary amongst local banking Units of Russian and CIS banks registered in the Republic of Cyprus. As of today, the Russian Commercial Bank (Cyprus) Limited is one of the largest and most dynamic banks in the Republic of Cyprus.

The Russian Commercial Bank (Cyprus) Limited provides a full range of wealth management services for structuring and administration of private and family capital, as well as a

wide range of services for corporate and institutional clients.

The Bank’s branches are located in its representative offices in Nicosia and Limassol, and in Moscow and London.

contact details Russian Commercial Bank (Cyprus) Limited.

Registered office: 284 Arch. Makarios III Ave., Fortuna Court, Block B, 2nd floor, 3105 Limassol, Cyprus.

Headquarters address: 2 Amathuntos Street, P.O. Box 56868, 3310 Limassol, Cyprus.

Tel.: (+357) 25355722, 800 00722 Fax: (+357) 25342192 e-mail: rcb@rcbcy.com Website: www.rcbcy.com

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Your trusted banking partner

Open an account with the Russian Commercial Bank (Cyprus) and enjoy a wide range of financial services, tailored to the needs of our clients.

Wealth management solutions

Classic banking products and services

Solutions for corporate and institutional clients

• Trust and fiduciary services, including structuring and administration of assets

• Accounts in various currencies

• Various lending solutions

• Internet banking

• Investment funds under RCB management

• Portfolio management • Brokerage services

• Broad range of fixed-term deposits

• Structured products

• Credit cards

• Fiduciary deposits

• Cheques and bankers drafts

• Broad range of investment services for institutional clients • Stock option programmes for management

We are open Monday to Friday, 9 am to 5 pm, continuously

Limassol branch Leoforos Amathountas 104, Zavos Seasons Plaza 4532 Agios Tychonas (Tourist Area)

Nicosia branch Maria House, 1 Avlonos Street 1075 Nicosia

The Russian Commercial bank (Cyprus) is operating in Cyprus since 1995 and is a member of the VTB Group, a leading international financial services group of Russian origin.

Russian Commercial Bank (Cyprus) Limited. Private Limited Company. Registration number: 72376.

Registered office: Arch.Makariou III, 284, Fortuna Court, block B, 2nd floor, P.C. 3105, Limassol, Cyprus.

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opinion

Laiki Bank Looks to the Future As the Group repositions its strategy, the focus is once again on the Cyprus market

T

By Annita Philippidou

The Group’s Greek operations are currently being restructured so as to improve performance

he financial and debt crisis created very difficult economic conditions during 2011 for almost all of the eurozone countries and an extremely adverse operating environment for the banking sector. The prevailing uncertainty surrounding developments in macroeconomic conditions was the main characteristic of the economic and business climate, and within this environment it was natural that business and investment activity was particularly subdued.

Despite the adverse economic environment, Laiki Bank Group achieved an annual increase of 3.2% in pre-provision profits, which reached €388 million. Net interest income was up 13% at €799 million. Total operating income reached €1,037 million, recording an increase of 2%, while operating expenses, including staff costs, were contained at the previous year’s levels despite inflation, reflecting the significant efforts made to reduce operating costs and improve productivity in all geographical regions where the Group operates.

It is also important to note that the pre-provision profits from Cypriot banking operations represented 80% of the Group’s total and reached €312 million, a significant increase on its 2010 performance.

Despite improved operating profitability in Cyprus, the escalating Greek sovereign debt crisis and the prolonged recession in the Greek market had a severe impact on the Group’s financial performance.

For this reason, it was judged appropriate to transparently clarify the effects of the prolonged Greek economic crisis on the Group’s financial results, in order to enable it to operate profitably in the future.

The major effects of the Greek crisis on the Group’s 2011 financial results were the following: Impairment of around €2 billion as a result of the “haircut” on the Group’s holding of Greek Government Bonds.

Increased loan provisions of over €800 million in the last quarter of 2011. With the objective of decisively confronting all potential impairments, mainly in Greece, Management commissioned two independent diagnostic reviews of its loan portfolio by specialised external consultants. These reviews, which were completed at the beginning of 2012, formed the basis for the strengthening of the cumulative provisions, reflecting a scenario of a continuation of the current negative environment.

The Group now has a 52% coverage ratio, one of the highest in the Hellenic banking sector.

Impairment of €800 million of the goodwill created by the triple merger of Egnatia, Marfin and

info: Annita Philippidou is Group Chief Financial Officer of the Laiki Bank Group.

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Laiki Banking Groups in 2006, as a result of the ongoing adverse macroeconomic conditions prevailing in Greece. It should be stressed that the goodwill impairment charge does not in any way affect the Group’s regulatory capital position in accordance with the European capital adequacy regulations.

After the loss from the “haircut” on the Bank’s Greek Government Bonds and the increased provisions referred to above, the Group’s loss for 2011 which affected capital amounted to €2.5 billion, while including the goodwill impairment, the accounting loss rose to €3.3 billion.

For 2012 the main objective is for the capital strengthening plan to succeed so that the Core Tier 1 capital ratio reaches 9%, as required by the European Regulatory Authorities.

The capital strengthening plan contains a number of targeted initiatives, including the optional exchange of existing capital securities at their nominal value, the deleveraging and optimisation of the loan and investment portfolio, as well as the raising of new equity of up to €1.8 billion via a rights issue from existing shareholders and/or a private placement to one or more strategic investors.

The Group has repositioned its strategy, focusing on the Cyprus market where it has an established leading presence and a strong brand value. The main business areas of the Group – International Business Banking, Retail Banking and Commercial Banking –continue to contribute consistently to profitability, and it is expected that they will be further enhanced by the significant potential created

by Cyprus’ confirmed hydrocarbon reserves and the country’s opportunity to become a regional energy hub and an alternative energy channel to the rest of Europe. The Group’s Greek operations are currently being restructured so as to improve performance and, ultimately, enable the Group to benefit from a future recovery of the Greek economy.

An integrated organisational model with experienced executives heading all geographical areas of the Group has been already put in place to deliver the new strategy. In the medium term and provided that economic conditions do not deteriorate, the Group aims at a net interest margin in excess of 2.75%, a cost income ratio below 50% and a return on tangible equity of over 15%.

Through these actions and the gradual normalisation of the economic environment, the Group can look forward to a new era of increased operational profitability and an enhanced ability to finance businesses and households where it operates, with the main emphasis on the Cyprus market.

cyprus law firms

Chambers & Partners Feature Cyprus’s Top Lawyers THE ANNUAL LIST OF THE WORLD’S LEADING LAWYERS FOR BUSINESS INCLUDES PLENTY OF CYPRIOTS

S

ince 1999, Chambers & Partners has been researching the legal markets of over 180 countries. It has more than 130 full-time researchers who interview thousands of lawyers and their clients around the world. This intensive, continuous research identifies the world’s leading lawyers and law firms – those which perform best according to the criteria most valued by clients. The firm’s reputation is based on the independence and objectivity of its research. No lawyer can buy his way into the rankings! As a result, the firm’s directories, which are published annually, are viewed as the most accurate and the most reliable. The 2012 edition of Chambers Global was published on March 16 and Gold has been given exclusive access to the publication’s Cyprus section, excerpts of which are reproduced on these pages.

CYPRUS: BUSINESS AND LEGAL ENVIRONMENT

D

espite being one of the world’s smallest nations, Cyprus has developed into a major financial and business centre. Located at the crossroads of Europe, Asia and Africa, close to the busy shipping and air routes linking Europe with the Arab world and the Far East, Cyprus is a strategic hub for business activities in the region.

By Elias Neocleous, Head of the corporate and commercial department of Andreas Neocleous & Co LLC.

Business Environment

For many years Cyprus has been an excellent location for holding companies, for a host of reasons, including its transparent

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legal system, excellent communications and world-class professional and financial services. It has an open, free market, with no restrictions on movement of capital, and a modern, business-friendly commercial environment.

Cyprus’s tax system is a particular source of competitive advantage. The thorough review that was undertaken in preparation for EU membership produced a tax regime that complies fully with EU and OECD standards, and at the same time enhances Cyprus’s com-

CYPRUS HAS A WELL-DEVELOPED, TRANSPARENT AND RELIABLE LEGAL SYSTEM BASED ON COMMON LAW.

petitiveness as an international business centre. Cyprus has a modern, simple tax system, with the lowest rates of corporate tax and VAT in the EU. It has a network of double taxation treaties covering more than 40 countries and a further 20 treaties are under negotiation or awaiting ratification. There is a complete participation exemption and no taxation of capital gains except gains arising from real estate in Cyprus. Reorganisations and cross-border mergers are tax-exempt.

Since joining the EU, Cyprus has consolidated its position as the main portal for investment between the EU and other Western economies on the one hand, and the dynamic markets of CEE, India and China on the other.

Cyprus’s excellent relations with Russia date back to the island’s independence in 1960, and for some years Cyprus has been the largest source of overseas investment into Russia. Interposing an appropriate Cyprus holding or finance structure between investors in the EU and the operating investee company in Russia can significantly reduce tax ‘leakage’, increasing post-tax income by 10% or more.

Cyprus is also home to myriad shipping and ship management companies, ranking among the leading ship registries, with the world’s tenth largest fleet in terms of registered tonnage. Limassol, the main commercial and shipping centre, is one of the most significant third-party ship management centres in the world. Its tonnage tax system, introduced in 2010, significantly reduces the tax burden on international shipping and ship management companies and makes Cyprus one of the most attractive environments in the world for international shipping.

Legal Environment

Cyprus has a well-developed, transparent and reliable legal system based on common law. The legislative framework was updated and aligned with the acquis communautaire in preparation for EU accession. There is an independent and respected judiciary. Litigation can be protracted and time-consuming but effective interim remedies are available.

Lawyers may practise both as advocates, doing contentious work, and as legal consultants, doing non-contentious work. Most law firms are general practices comprising only a few lawyers.

There are some medium-sized firms, and a handful of large firms with specialised

FOR SOME YEARS CYPRUS HAS BEEN THE LARGEST SOURCE OF OVERSEAS INVESTMENT INTO RUSSIA departments. Law firms have traditionally operated as sole practitioners or partnerships but are increasingly organising as limited liability companies.

Legislative developments over the past year fall into three main categories, namely implementation of European legislation, domestic legislation aimed at improving Cyprus’s competitiveness as an international financial centre and, particularly in the second half of 2011, legislation aimed at cutting the budget deficit.

The Covered Securities Law, enacted in December 2010, establishes the legal framework for issuance of covered bonds in Cyprus complying with Directive 2009/65/ EC (the UCITS Directive) and Directive 2006/48/EC (the Capital Requirements Directive). It empowers credit institutions incorporated in Cyprus to issue covered bonds, subject to prior authorisation by the relevant supervisory body.

In the spring of 2011, a series of laws were enacted to streamline the process of issuance of title deeds for properties, and amendments, mostly of a technical nature, were made to the Banking Laws. In addition a levy on banks, based on customer deposits (but not interbank deposits), was introduced.

In August a series of measures were passed to reduce the government deficit, including increases in personal income taxes and other taxes and the introduction of a €350 annual company levy.

Cyprus has continued to update and extend its wide network of double taxation agreements. New agreements have been signed with Slovenia, Kuwait, Denmark, Germany, the United Arab Emirates and Armenia.

During 2011, the Department of Merchant Shipping also issued detailed procedures for the operation of the tonnage tax system.

The government has promised that future deficit reduction measures will focus on promoting enterprise and innovation and eliminating unnecessary expenditure, rather than increasing taxation and, even allowing for the new companies levy, Cyprus remains an extremely attractive corporate base.

Leading Firms

BAND 1 Andreas Neocleous & Co LLC Chrysses Demetriades & Co BAND 2 Antis Triantafyllides & Sons Aristodemou Loizides Yiolitis LLC Clerides, Anastassiou, Neophytou LLC BAND 3 Chryssafinis and Polyviou Dr. K. Chrysostomides & Co LLC George Z. Georgiou & Associates LLC. Georgiades & Pelides Patrikios Pavlou & Associates LLC Stelios Americanos & Co

Leading Individuals

SENIOR STATESMEN Neocleous Andreas (Andreas Neocleous & Co LLC) BAND 1 Mavrellis Christos (Chrysses Demetriades & Co) Neocleous Elias (Andreas Neocleous & Co LLC) Triantafyllides Stelios (Antis Triantafyllides & Sons) BAND 2 Aristodemou Pavlos (Aristodemou Loizides Yiolitis LLC) Georghiades Chris (Chrysses Demetriades & Co) Georgiades Kyriacos (Andreas Neocleous & Co LLC) Ioannides Pambos (Ioannides Demetriou LLC) Pavlou Stavros (Patrikios Pavlou & Associates LLC) Polyviou Polis G (Chryssafinis and Polyviou) Yiolitis Emily (Aristodemou Loizides Yiolitis LLC) BAND 3 Americanos Stelios (Stelios Americanos & Co) Anastassiou Effie (Clerides, Anastassiou, Neophytou LLC) Clerides Stavros (Clerides, Anastassiou, Neophytou LLC) Georgiades Marcos (Georgiades & Pelides) Iordanou Theodoulou Lia (Patrikios Pavlou & Associates LLC) Pitsilli-Dekatris Chryso (Dr. K. Chrysostomides & Co LLC) Clerides Stavros (Clerides, Anastassiou, Neophytou LLC) Georgiades Marcos (Georgiades & Pelides) Iordanou Theodoulou Lia (Patrikios Pavlou & Associates LLC) Pitsilli-Dekatris Chryso (Dr. K. Chrysostomides & Co LLC)

Up-and-coming individuals

Erotocritou Nancy (Aristodemou Loizides Yiolitis LLC) Alphabetical order within each band.

Band 1 is the highest.

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cyprus law firms

HOW LAWYERS ARE RANKED

Every year Chambers & Partners carries out thousands of in-depth interviews with clients in order to assess the reputations and expertise of business lawyers worldwide. The qualities it looks for (and which determine rankings) include technical legal ability, professional conduct, client service, commercial awareness/astuteness, diligence, commitment, and other qualities most valued by the client.

BAND 1 ANDREAS NEOCLEOUS & CO LLC Elias Neocleous focuses mainly on cross-border transactions and has great expertise in the areas of corporate, finance and tax. Sources see him as one of the leading practitioners in the field, and describe him as “highly knowledgeable and pragmatic in his approach and advice,” adding that he is a “serious expert on UK and Cypriot trust law.” He drafted a part of the latter. Kyriacos Georgiades is widely admired for having a strong understanding of EU law as well as cross-border M&A work. International clients and peers highlight his strength as a negotiator: “He understands the commercial reality of what counterparts are trying to achieve, but also provides good legal advice.”

Considered a pillar of the Cypriot legal market, managing partner Andreas Neocleous is highly sought after by international clients for his knowledge of energy and corporate matters.

Sources are unanimous in their praise: “He has a very good grasp of litigation and strategic thinking, and handles well the co-ordination of various teams of lawyers in different countries.”

Another interviewee added: “I think he is a remarkable lawyer.”

CHRYSSES DEMETRIADES & CO Former Minister of Finance Christos Mavrellis is a highly regarded figure in the area of foreign investment in Cyprus. He is widely seen as “one of the top lawyers in Cyprus, definitely in

THE GOVERNMENT HAS PROMISED THAT FUTURE DEFICIT REDUCTION MEASURES WILL FOCUS ON PROMOTING ENTERPRISE AND INNOVATION

the area of corporate law,” and he frequently advises international clients on matters ranging from debt restructuring to recapitalisation.

Chris Georghiades is strong on finance assignments, advising offshore financial services companies and international funds.

He also offers expertise in niche areas including international sports law, and is a member of the International Court of Arbitration for Sport.

BAND 2 ANTIS TRIANTAFYLLIDES IDES ES & SONS ES N NS US and UK-educated Stelios telios Triantafyllides is described as “one of the leading sources on the market” for his expertise in company and commercial law. He focuses particularly on capital markets.

ARISTODEMOU LOIZIDES YIO YIOLITIS Y LITIS LLC Clients assert that managing partner Pavlos Aristodemou is “proactive and practically creative,” as well as technically strong.

Sources say he upholds an international standard of client service. He specialises in banking and financial law and advises a raft of international banks. Emily Yiolitis is strong on tax matters, advising commercial clients on their tax planning issues and other corporate matters. She has previously worked at the European Parliament. Nancy Erotocritou provides “extremely expedient advice” and has impressed clients with her practical approach and strong knowledge of corporate and M&A law.

CLERIDES, ANASTASSIOU, NEOPHYTOU LLC According to observers, Effie Anastassiou understands “the intricate economic matters at the heart of corporate finance.”

Sources also note her “good grasp of international work and all-round excellence.” Stavros Clerides leads the firm’s tax practice and is also a chartered accountant with many years of experience; he has worked for some of the Big Four accounting firms in Europe and New York. He uses his “comprehensive knowledge of corporate and tax law” to create “innovative cross-border structuring” solutions.

BAND 3 CHRYSSAFINIS AND POLYVIOU Managing partner Polis Polyviou is a highly regarded and senior figure in the area of contentious corporate matters, where sources describe him as “a wellknown and effective litigator.”

DR. K. CHRYSOSTOMIDES & CO LLC Corporate and commercial head Chryso Pitsilli-Dekatris is cited as an excellent authority on corporate law matters, and has impressed interviewees with her in-depth legal

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knowledge. Educated in the UK, she is also a member of Middle Temple, London.

GEORGE Z. GEORGIOU & ASSOCIATES LLC Founding partner George Georgiou is the main contact for this employment and restructuring-focused firm. He is described as “dedicated, meticulous and knowledgeable,” and is a highly regarded litigator.

GEORGIADES & PELIDES Marcos Georgiades is considered an important figure in the area of banking and finance, with over two decades of experience practising in Cyprus. He has previously worked with Slaughter and May in London, specialising in stock exchangerelated transactions.

PATRIKIOS PAVLOU & ASSOCIATES LLC Lia Iordanou Theodoulou assists with transactions in the corporate and finance areas, and has “extensive experience and documentation skills,” according to clients. Educated in the UK, she is a member of both the Cyprus Bar Association and the Bar Council in England. Stavros Pavlou is highlighted as an exceptional corporate lawyer by interviewees.

He has an excellent working knowledge of Russian-Cypriot cross-border matters and is able to advise on both contentious and noncontentious matters.

STELIOS AMERICANOS & CO Practice head Stelios Americanos is deeply admired in the area of corporate and commercial law. Clients cite his ability to handle complex, international transactions as one of his key strengths.

Other Notable Practitioners

Pambos Ioannides of Ioannides Demetriou LLC has many years’ experience of advising clients on issues ranging from M&A activities to competition disputes.

He is upheld as a leading individual by sour sources, who say he is “a real heavyweight”

ONLINE GAMES

The Island of SUN, SEA AND… ONLINE GAMES

THE BELARUSIAN DEVELOPMENT TEAM OF THE INTERNET GAMING SENSATION WORLD OF TANKS IS MOVING TO CYPRUS By Costa Ioannides. Photography by Jo Michaelides 58 Gold THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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From left to right: Ivan Mikhnevich: Co-Founder, CTO Vladimir Kislyi: Co-Founder & CFO Victor Kislyi: Co-Founder, President & CEO Marat Karpeko: COO

the international investment, finance & professional services magazine of cyprus

Gold 59

online games

I

t’s not often that a childhood hobby evolves into a hugely successful business but Belarusian brothers Victor and Eugene Kislyi, encouraged and financed by their father Vladimir, have matched their passion for video gaming with an instinctive knack for knowing how to monetize their ideas in the Internet age.

After working on a pet project in video game development in 1995, the Kislyi brothers attracted a handful of like-minded game-developers and close friends who became the development nerve-centre of what is now Wargaming.net, a leading online video game development company. Following a decade of commercial successes, game releases and acquisitions (including the development and sale in 2001 of the innovative banner advertising solution AdRevolver which was eventually acquired

by Yahoo), Wargaming.net released the award-winning World Of Tanks in 2011 which was the company’s first free-to-play MMO (Massively Multiplayer Online) game. With a growing number of players worldwide (4 million and counting), the company’s stated aim is to more than double its flagship game’s popularity and multiply its game revenues. Wargaming. net is currently in the process of consolidating its global headquarters in Cyprus.

Gold caught up with the team and asked

CEO and co-founder Victor Kislyi why the Belarusian videogame developers are in the process of making Nicosia their new home.

Gold: What usually comes first, the commercial concept or the game itself?

Victor Kislyi: It’s all about the game. It’s show business. Your game has to be perfect – usually it requires a big, battle-hardened, veteran team of developers. And in addition you must also provide the highest-quality service to your customers, so you need a state-of-the art global operational infrastructure. There are dozens of aspects to take care of, including customer support, community management, PR, branding, partnerships, local traditions for different markets, trade shows, etc. And they all require non-stop improvement. Freeto-play is a magical concept which ensures

World of Tanks and two upcoming projects are games for boys but our “boys” range from 13 to 45 years old!

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that, if you have all of these things, monetization will follow naturally.

Gold: What’s the typical profile of the majority of your users?

V.K.: World of Tanks and two upcoming projects are games for boys but our “boys” range from 13 to 45 years old! The shift is towards an older audience, settled guys who have work, family, kids and disposable income.

They used to play computer games at school and college, they value their time, appreciate quality, and can spare a couple of dollars a month for their favorite game. There are also younger players, of course, typical moderndays gamers who are very passionate about competitive action video games.

Gold: What percentage of your users are paying gamers?

V.K.: Although the game is available online for free, we are proud of the fact that World of Tanks has one of the highest paying user ratios in the industry: between 20% and 30%, depending on the region. They like the game, they spend hundreds of hours playing it, and they justify these occasional monthly micro-payments. Schoolboys and teenagers, as you can imagine, prefer to spend time rather than money. However, we love them too. They are an important component of the game’s ecosystem. We provide non-paying users with the same level of support and community involvement.

Gold: Currently there are no serious competitors in your game’s genre but it’s just a matter of time before the copycats arrive.

What’s your strategy with regard to protecting your products and their market share?

V.K.: As I mentioned before, only a handful of companies could accumulate such vast and experienced team of developers. A photo-realistic game like World of Tanks requires a minimum of three years’ intensive development and tens of millions of dollars.

Our forthcoming products, like World of Warplanes will, of course, take us less time to develop, as we are heavily reusing our proprietary technology. We strongly believe that no other company in the industry possesses such immaculate cloud-based server technology.

Also, we have established a network of publishing centres across the globe: the former USSR, Europe and North America. We have partners in China and Vietnam, we are preparing further expansion into Korea and other Asian countries and we are currently examining the prospect of expansion into the Middle East and Brazil. We are talking about hundreds and maybe even thousands of employees in those offices around the globe.

They all need to be well-trained professionals, operating within a unified organisational structure. It’s not an easy challenge. And, finally, our company is heavily re-investing its revenue into further products. By the time anyone produces something similar to World of Tanks, we will already have half a dozen other products, reinforcing each other and defending our virtual battle universe from all imaginable angles.

Gold: The co-founders of Wargaming.net are all graduates of the Belarusian State University. Do you believe that there are other technology hubs that are poised to challenge Silicon Valley in the realms of high-tech start ups?

V.K.: The world is an interesting place today.

Everything is connected and that allows talent and ideas to flow freely. There are already plenty of technology-heavy regions, to name a few: Texas, Seattle, Canada, Scandinavia, the former USSR, Germany, Ireland... We should also be watching China and Brazil closely. We are delighted to see a growing number of nontraditional educational institutions specialized in game development and the visual arts.

Gold: Start-up financing for the company came from your father Vladimir Kislyi. Most fathers, however, try to discourage their sons from spending too much time on computer games! Was this initially the case with yours, too, or did

World of Tanks

advantages and the ability to achieve our aggressive expansion goals. Of course, given the very high overall interest in our industry by investors and the general public, we might consider an IPO in the future.

WORLD OF TANKS IS: • The most popular and most profitable game in Russia • It features in the Guinness Book of World Records as the game with the most players at the same time: 250,000 players simultaneously at the end of 2011.

• 18 million players worldwide • Monthly profits: $4.7million in Russia, $3million in Europe and the US, $1million in China • The game’s target group is boys aged 13 to… 45 • It has one of the highest paying user ratios in the industry, from 20%30%, depending on the region.

he instantly recognize the commercial prospects of his sons’ hobby?

V.K.: Our parents ensured that their sons received the best education and developed an open-minded and analytical approach to everything. Ironically, our father happened to be passionate gamer himself! He was playing real-time strategy games like Command and Conquer in the mid-Nineties. At the time, computer games and their progressive digital technology looked promising and it seemed that it might turn into serious business. Of course, the gaming industry has evolved in a way we could never have imagined in 1996.

We were given a lot of moral support by our father, as well as mentoring. It was his idea to develop some side businesses, such as contract software development services, in order to fund the production of our games.

Gold: Your company was recently listed on the Cyprus Stock Exchange. What was the motivation for this?

V.K.: Wargaming Public Company Limited is listed on the Emerging Companies Market of the Cyprus Stock Exchange. The main reason for the listing is to operate under a proper EU structure, which will allow the company to pursue its objectives correctly. We believe that, even though we are now subject to more regulation, this listing gives us many

Gold: Your management team is in the process of joining your finance team in relocating to Cyprus. What was the rationale behind moving operations here?

V.K.: Now that we are listed on the Cyprus Stock Exchange, you can imagine the amount of paperwork that has to be dealt with: regulations, reports, accounting, audits, and banking. And we are not only bringing our business people to Cyprus; we are also hiring local professionals from what we have found to be a highly-educated, multilingual workforce pool, and they will be running the formal side of the business.

We have really been impressed by Cyprus’ business environment and its sophisticated infrastructure. It is effective and businessfriendly, with a favourable tax system and modern banking networks, and these are the main things that attracted us to the island, as well as the fact that Cyprus offers some of the lowest set-up and operating costs within the EU. We are truly amazed by the way in which the public service and the public sector in general support private businesses. the Wargaming team believes in Cyprus and its abilities, and our decision is to come, stay and invest in the island is proof of this belief.

We were also drawn to Cyprus’ strategic position in the middle of three continents, putting us right in the centre of everything.

Of course, the high standard of living and other lifestyle advantages are also a plus. I mean, it’s Cyprus! It’s sun and sea! Mediterranean air and fresh sea food! Who would refuse to work in such a resort?

Gold: Do you play World of Tanks yourself?

V.K.: Sure I play. It’s an excellent stress reliever! Many guys can relate to the situation in which you arrive home tired, the kids are shouting, your wife may be on your case about something or other, so logging on and completing a quick 10-minute game where you blowing up a few other online players is a great way to blow off some steam! The game is highly strategic, which means that, for example, some of your team need to ‘dig in’ and stay behind to defend the base while the others scout ahead to close in on the opposing team’s base or form defensive lines. To some degree it can be equated to chess but with each individual player being an individual piece on the battlefield.

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accountancy

Fifty Years On

THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS OF CYPRUS (ICPAC) WAS FOUNDED IN 1961. JUST OVER HALF A CENTURY LATER IT IS THE REGULATORY BODY OF THE ACCOUNTING PROFESSION AND HAS OVER 3,000 MEMBERS. THE NEW MAN IN CHARGE, KYRIAKOS IORDANOU, IS LOOKING FORWARD TO ALL THE CHALLENGES THAT COME HIS WAY. By John Vickers

W

hen Kyriakos Iordanou accepted his appointment as General Manager of the Institute of Certified Public Accountants of Cyprus (ICPAC), some of his friends thought that he was making a huge mistake by giving up the security and benefits of his job in the civil service for the challenges and demands of the private sector. “I was seen as being a bit crazy!” he admits but he has no regrets. “I believe I can deliver better from my new position than I could as a highly-paid civil servant. Here I have the room and the means to develop both the profession and myself.”

Iordanou has been involved in the Institute’s affairs for many years, both as a committee member but, in particular, as a member of the Board for nine years. From 2009-2011 he was Vice President of the Institute. Asked why he was willing to “sacrifice” his life in the civil service, he replies without hesitation, “The challenge. The challenge here is incredible and having been around the affairs of the Institute I felt as if I were at home. Taking over as General Manager was an opportunity for me to realize my ambitions and visions for the Institute.”

The accounting profession in Cyprus has always been seen as a one that provides greater prospects than perhaps any other and, says Iordanou, this is still the case in 2012, given that the professional services sector is still thriving, by contrast with is happening in most other sectors at the moment.

“Even during this period of austerity measures and reduced growth, the number of practicing auditors is on the rise, which shows that there is room for them and that it is a rewarding business.“ Obtaining a professional accounting qualification means having the opportunity to work and be marketable in many companies and in a variety of posts. “It’s something

IT IS OUR VISION TO SEE CYPRUS ESTABLISHED AS AN INTERNATIONAL BUSINESS CENTRE. IT DEFINITELY HAS THE POTENTIAL I would recommend to all parents and all future school-leavers,” he says.

Iordanou himself became an accountant because he wanted to do something that would expand his business and employment horizons. “The professional accounting qualification takes you to a crossroads from which many different roads lead off and you can select the one that suits you the best. It gives you mobility throughout the whole of the economy and, needless to say, both inside and outside Europe.”

Accountancy has always suffered from an image problem. Some people think that is synonymous with boredom while others are under the impression that it leads to instant wealth.

Neither are correct, says Kyriakos Iordanou: “Many people think that as soon as they become accountants or auditors they will become rich. This is not the case! Being trained to a level where you are competent to work as an auditor takes a lot of work and study and in some ways the profession is more difficult than others. Accountants and auditors always work to deadlines and knowing that everything has to be done within a certain period of time is, in itself, stressful. In order to cope, you need a minimum level of professionalism. It’s true that the work can be repetitive and there may be a certain amount of boredom involved but I think every job has a repetitive side to it. As you grow and develop you will begin to face challenges on a daily basis.”

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The accounting/auditing profession is currently facing a major challenge from Brussels in the form of a discussion paper on a proposal to modify the 8th EU Directive, the main aim of which is to bring about greater transparency in the profession. “We agree with that but we have very serious concerns about the means to achieve it,” says Iordanou. “The Commission’s intentions are good but it also seems to believe that the ‘Big Four’ firms are too dominant and should be contained in some way, thereby allowing the smaller firms to grow. As an idea it is not without its merits but the big question is how to implement it properly and I think it needs to be examined more thoroughly. We have submitted our views on the proposal to the government and circulated our positions and comments. I think we share the same views as all other corresponding institutes throughout Europe and the International Federation of Accountants. So the profession as a whole has reacted in more or less the same way.”

Last year ICPAC celebrated its 50th anniversary, having been founded by a group of 21 professional accountants at a time (1961) when their number was very small. Today it has approximately 3,200 members. Its main aim is to train, instruct and inform its members of issues related to their professional activities. It is also the regulatory body of the profession, issuing practising licences, monitoring its members for the quality of their work, taking disciplinary measures when necessary, and providing training. The Institute currently has 18 active committees, each of which deals with a different sector, ranging from taxation to EU issues.

“They provide feedback to the Council or they liaise with the local authorities in the preparation of legislation and the promotion of Cyprus as a business centre. We try to be as influential as possible with the government and other stakeholders in the economy.”

A major milestone for ICPAC was the adoption of the joint examination scheme

which operates in parallel with the ACCA. “We currently have around 3,000 students,” explains Iordanou. “Everyone residing permanently in Cyprus and taking the ACCA exams automatically comes under our scheme and we are responsible for both. The exams are more or less the same as the ACCA ones but we have introduced some local variant papers which examine the students on Cyprus tax, Cyprus law and so on. This has been a very important step in our evolution and now, many students from overseas go back home with a certificate that says ACCA/ICPAC.” The Institute’s 3,200 members work in both the public and private sectors, in the industry and in banks, and they have a variety of qualifications.

“It’s a big mix of different types of accountants with various needs,“ notes Kyriakos Iordanou. “We try to service the bigger firms which have specific needs and demands but it is mainly the smaller firms that need more attention and care from us: training and guidance where they may lack the capacity, internal resources and the means to have all the required expertise and technical competencies on their premises. We try to meet these needs either by direct consultation or through the organisation of seminars on both general and specific topics.”

Another main challenge and a permanent objective of the Institute is to raise its visibility. The new General Manager believes that this can be achieved “by playing a role in the overall socio-economic environment, by acting as a partner to all the other business stakeholders – the banks, listed companies, CySec, the Cyprus Chamber of Commerce, The Employers & Industrialists Federation, etc. – and also by fulfilling its role with the government too. We are in close cooperation with the Inland Revenue, the VAT authorities, the Registrar of Companies and we are striving to expand this cooperation.”

In addition to this, the Institute has planned a number of events and activities this year which will raise its profile both locally and internationally, starting on 25 April with a presentation in the City of London at which it will promote Cyprus to UK businessmen.

On 23 May, the 2nd Nicosia Economic Congress (sponsored by Gold) will feature prominent speakers from Cyprus and abroad.

On 19 July, during the first month of Cyprus’ EU Presidency, The President’s Debate will be held in collaboration with the ACCA with MEPs, EU Commissioners and key speakers from Europe and Cyprus. Towards the end of September an event focusing on

MILESTONES 1961: ICPAC is established

1974: The island’s accountants submit proposals to the government to help the economy and business to overcome the problems caused by the Turkish invasion.

1981: International Accounting Standards and International Standards on Auditing are adopted.

2001: The House of Representatives approves Law 76(I)/2001 which harmonises Cypriot legislation with EU Directives and makes ICPAC the competent body to regulate and supervise the accountancy profession in Cyprus.

2002: The Institute appoints its first General Manager.

2008: ICPAC moves to new premises in a listed colonial-era building on Byron Avenue, Nicosia.

energy matters will take place in cooperation with the Institute of Chartered Accountants and in late November/early December, the Federation of Mediterranean Accountants will hold its annual conference in Cyprus.

It’s going to be a very busy year but Kyriakos Iordanou relishes the thought. “I hope it will continue like this for many years,” he says. ”Our profession is already one of the spearheads of the economy. It is our vision to see Cyprus established as an international business centre and through our members we are trying to attract as many foreign investors and foreign companies to do their business through Cyprus. Cyprus definitely has the potential and both the Institute’s President and I are more than willing to play our role in helping our country to fulfil that potential.”

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ENERGY

POWER SHARING HOW NASOS KTORIDES PLANS TO MAKE CYPRUS A VITAL LINK IN THE WORLD’S MOST AMBITIOUS UNDERSEA ELECTRICITY CABLE PROJECT. By Costa Ioannides

A

s this issue of Gold went to print, Athanasios (Nasos) Ktorides was preparing to endure extreme sub-zero temperatures in order to run 26.2 miles in one of the remotest parts of the planet by taking part

in the 2012 North Pole Marathon on 5 April. Ktorides’ passion for marathons extends to more than just running them: in 2010, through the Athanasios Foundation, he founded the Nicosia Marathon with the aim of making it the capital’s major sporting, cultural and social event.

For many, running and organising marathons would be fulfilling enough but, for Ktorides, enduring physical tests of stamina is only one aspect of his multifaceted personality.

He is ready to take all kinds of positive ideas and push them as far as they can go, and not only where his personal life is concerned. Professionally, Ktorides has proved to be no less ambitious or daring, to the point where he is planning to build an undersea ‘energy bridge’, the so-called EuroAsia Interconnector, linking the power systems of Israel Cyprus and Greece.

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ENERGY

Ktorides, a Cypriot by birth, studied Business Administration in Athens at the American College of Greece. Barely four years after his graduation, he founded the Quantum Corporation Group in 1994 and, under his leadership the company achieved steady expansion through proactive investments and strategic alliances in the production and distribution of electricity, petroleum refining, renewable energy and land development.

Ktorides initially became involved in the energy sector in 2000 when he was invited to the World Economic Forum in Davos, Switzerland by Canada’s former Prime Minister Brian Mulroney where he was asked if he might be interested in investing in the Republic of Serbia, which at that time was in the process of privatising the country’s large state companies via voucher privatisation.

Following consultations with various experts, Ktorides’ investment team settled on a choice of two possible sectors in Serbia: timber and energy. Taking the final decision was greatly complicated

by the country’s infrastructure which had suffered from decades of communist rule, the ravages of the Yugoslav war and the NATO bombing campaign. It was a “landscape characterized by devastation and recently-created cemeteries”, Ktorides recalls, yet despite the challenges, over the course of a few months an investment fund was established to focus on energy. Through a combination of “vouchers” and his organisation’s own investments, five electricity power stations with a total power output of around1420 MW were purchased and brought under management.

Choosing the energy sector over timber proved to be the right decision and, through a combination of initial undervaluation and good management, from 20002005 the fund’s unit value multiplied by an impressive105%. This success not only gave local Serb investors a profit but was used to display Ktorides’ commitment to the Republic of Serbia and its people.

“We made it a priority to invest in and support the Serbian people; we provided

THE EUROASIA

INTERCONNECTOR PROJECT

scholarships to assist up-and-coming local talent, and invested in social projects and construction initiatives,” he says.

As the success story continued to unfold, Ktorides began to examine the possibility of supplying Greece with electricity from Serbia since all five of his power stations were connected to the European electricity grid. The idea led to a strategic alliance between Greece’s Public Power Corporation (PPC), the Quantum Corporation Group and Bank of Cyprus which went on to acquire additional power stations on the borders of BosniaHerzegovina, Montenegro and Serbia.

For many entrepreneurs, this would have been ambition enough but with his typical big-picture far-sightedness, Athanasios Ktorides saw the dawning of a far grander scheme which eventually evolved into the idea of the EuroAsia Interconnector linking Israel, Cyprus and Greece).

“We visited countries in Africa in 2009, where natural gas is abundant and there is an ability to produce electricity from photovoltaic parks,” he explains. “There

It will be the most ambitious project of its kind in the world to date, both in terms of cable length and depth.

The cable length between Cyprus and Israel will be approximately 155 nautical miles, between Cyprus and Crete 320 nautical miles and between Crete and the Peloponnese, 65 nautical miles.

The total cable length will be 540 nautical miles. The maximum depth that the cable is expected to reach is 2,000 metres.

• Capacity: 2,000 MW • Estimated cost: €1.5 billion • Research period: 2012 • Completion time: 36 months from the launch of the project.

• Management: By technocrats from the participating companies and representatives of the governments of Israel, Cyprus and Greece.

• Expected yield: €17.5 billion over the life of the cable. The project cost will be amortized over a period of 1,500 days from the first day of operation.

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I suggested that we construct an undersea electricity interconnection from Africa which would reach Greece via Crete. The idea was supported by the Greek government but then came the Mari blast in July 2011 which brought the issue of Cyprus’ energy isolation to the fore. That was when the idea of interconnecting Cyprus with Crete solidified. We then created an executive team of experts and technicians to develop the idea and present it to the PPC in Greece.” Undersea high voltage cables are a relatively recent phenomenon but, as Ktorides recalls, “the distance between Cyprus and Crete is just 9 nautical miles greater than the distance between Norway and Holland where such an interconnection has already been established. Also, the depth of the sea bed between Cyprus and Crete is comparable to that between Italy and Sardinia where there is also an undersea interconnection. It cost €600 million but revenues in the first two months amounted to €50 million so it is not only technically possible but financially viable.”

The EuroAsia Interconnector also has

has the ability to export electricity from its power stations in Serbia all the way to consumers in Portugal. Cyprus is going to attract significant investments from foreign companies.”

With Greece and Cyprus looking at the proposal favourably, all that remained was to persuade the third vital element in the EuroAsia Interconnector concept: Israel.

“From the outset the relevance of Israel was at the forefront of my mind so we went there and met with the leadership of the Israel Electric Corporation (IEC),” he told Gold. “At present Israel does not have other friendly neighbours with which to collaborate on energy but the EuroAsia Interconnector will link the country with Cyprus and Greece and enable Israel to utilise its own newly-discovered gas reserves to generate power which it could also export to Europe. Naturally the Israelis instantly recognised the win-win aspects of the proposal.”

The first vital step towards realising the EuroAsia Interconnector vision was taken recently through the signing of a formal

WE ARE TALKING ABOUT THE PROSPECT OF TRANSFORMING CYPRUS INTO A SIGNIFICANT ELECTRICITY EXPORTING COUNTRY immense implications for Cyprus. At an estimated cost of €1.5 billion, it will enable the island to cease being isolated in electricity terms and become part of an energy bridge, facilitating the extension of the European electricity grid. The EuroAsia Interconnector will also enable the export of electricity to continental Europe, thereby reaping significant financial gains through the use of power generated locally by natural gas and renewable energy sources. “We aim to transform Cyprus (whose newly-discovered natural gas will enable excess power generation) into a significant electricity exporting country,” Ktorides says. “Quantum Energy already

memorandum of understanding between Israel, Cyprus and Greece to embark on the initial feasibility study for the project, the results of which will be formally presented to all three governments later this year. IEC Chairman Yiftach Ron Tal described the signing of MOU as a historic moment which has brought Israel closer to the day on which it ceases to be an economic and energy island while the Vice-President of the Israel Electric Corporation, Yasha Hain, depicted the EuroAsia interconnector project in biblical terms, comparing it to the exodus of the Israelites out of the wilderness and their miraculous crossing of the Red Sea.

NASOS KTORIDES • 1968: Born in Nicosia • 1990: Graduates from the American College of Greece

• 1994: Founds the Quantum Corporation Group.

• 1999: Part of the Quantum

Corporation Group is listed on the Cyprus Stock Exchange with admission to the FTSE/CSE 20 Index.

• 2000: Initiates and leads the negotiations for the creation of Commercial Bank of Greece – Cyprus Ltd. • 2000- 2001: Participates in the World Economic Forum in Davos.

• 2001- 2007: Appointed Executive Vice-Chairman of Commercial Bank of Greece – Cyprus Ltd. • 2002- 2003: Establishes the Euroinvestment Fund.

• 2009: In April Quantum formalises a strategic cooperation agreement on energy with the Public Power Corporation (PPC) of Greece and Bank of Cyprus.

• 2010: The Athanasios Ktorides Foundation organises the 1st Nicosia Marathon.

• 2011: Appointed Chairman of the company PPC Quantum Energy.

The first project of PPC Quantum Energy involves four hydroelectric stations in Serbia with an installed capacity of 238 MW. • 2012: A formal memorandum of understanding is signed between Israel, Cyprus and Greece with a view to constructing the EuroAsia Interconnector.

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opinion

Doing Business in Cyprus Competitiveness is the main economic problem of Cyprus

T

By Tassos Anastasiades

The planned twoyear wage freeze in both the private and public sectors is expected to lead to greater competitiveness

he current account deficit of Cyprus, like that of other countries facing similar problems, is covered by inflows of capital in the form of direct investments or bank deposits.

Unfortunately, this foreign capital may leave the country at any moment. If Greece still had the drachma and Cyprus the pound, it would be possible to devalue the currency, though any benefit would be temporary since the rise in the prices of imported raw materials, petroleum products and foodstuffs would lead to increased costs and retail prices. This, in turn, would lead to wage increases, making a second devaluation necessary. Having adopted the euro, devaluation is out of the question and, as Greek Prime Minister Lucas Papademos has noted, one alternative is to “devalue internally” by reducing wages and other incomes.

To increase the competitiveness of the economy, measures need to be taken to raise productivity and reduce costs through better methods of production and improved management, while introducing new products. Cyprus needs to cut bureaucracy in the civil service, improve education and Human Resources training and abolish unnecessary regulations.

At the same time, the island’s tax system must maintain competitive low tax rates while stateowned organisations should be securitized and partly privatized and those semi-government organisations that have ceased to justify their existence should be closed down.

The World Bank report entitled Doing Business 2012 notes that when it comes to securing a building permit, Cyprus is ranked 78th out of 183 countries while, for example, the UK is 22nd and Greece is 41st, since nine processes and 677 days are required while the cost amounts to 47.5% of the per capita income.

For registering property, Cyprus is 123rd on the list, compared to Estonia (13th), the UK (68th) and Italy (84th), since six processes and 42 days are needed and the cost amounts to 10.3% of the value of the property! On the issue of enforcing contracts, Cyprus comes 105th among 183 countries (compare this ranking to the 21st for the UK, 29th for Spain, 56th for Romania, 87th for Bulgaria and 90th for Italy). The country’s low ranking is the

info: Tassos Anastasiades is an economist and a former Director at the Ministry of Finance.

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result of the 43 processes and 735 days needed, while the cost amounts to 16.4% of the value of the contract.

Improving the island’s productivity is itself a long-term process but in the meantime we must try to improve our competitiveness by reducing production costs. It should be noted that in 2011, while productivity increased by 0.5%, wages increased by 2.6%. Similarly, in 2010 productivity increased by 2.2% while wages rose by 3.7%, in 2009 productivity rose by 1.1% while wages rose by 4.3%, and in 2008 the rise in productivity was a mere 0.9% while wages surged by 7.4%! It is not possible to award wage increases higher than productivity without downgrading the competitiveness of businesses and, by extension, of the economy, when there is no possibility of devaluing the island’s currency. The planned two-year wage freeze in both the private and public sectors is expected to lead to greater competitiveness.

A study prepared by KPMG for the Ministry of Finance states that businesses in Cyprus are burdened with €900 million in administrative costs plus €300 million in normal costs, and it makes a number of proposals aimed at reducing the administrative burden. The Government needs to implement these proposals and to introduce other measures which will help reduce bureaucracy in the broader public sector so that the state becomes more efficient and less costly to business and to consumers.

If there is one institution which is downgrading the competitiveness of the Cyprus economy, it is the Wage Indexation System (Cost of Living Allowance) according to which wages and salaries rise every six months on the basis of the cost of living. At the same time, employees receive increases on the basis of collective bargaining while those in the public sector benefit from a third salary increase the so-called “annual increment”.

Wage indexation existed in many countries in the past but it has been abolished throughout Europe and now remains in force in only four countries: Cyprus, Luxembourg, Belgium and Malta. In the other three countries, however, increases are awarded annually and there is a provision that wage indexation is deferred in times of economic crisis.

{april 2012}

ISSUE

13

+ BOOK REVIEW MONEY: Debt: The First 5,000 Years

By David Graeber

80

78

ECONOMY: How The West Was Lost: Fifty Years of Economic Folly - And the Stark Choices Ahead

By Dambisa Moyo 87 TAX & LEGAL: Political Economy of Corporation Tax: Theory, Values and Law Reform

By John Snape 89 LIFESTYLE: David Hockney: A Bigger Picture

By Tim Barringer and Edith Devaney 97

72

{money}

72 Going GloCal Professor Luis Filipe Lages speaks to Gold 76 USB Bank Focuses on Business Growth The Retail, Corporate and International Banking divisions of USB Bank

84

{economy}

84 Speaking Words of Wisdom Εconomist and analyst Fiona Mullen on the challenges facing Cyprus

82

{tax&legal}

88 Demand in the Legal & Corporate Services Sectors Continues The number of experienced corporate lawyers who are qualifying and looking for their first move after qualification is on the decline

80

{business}

80 Striving for Excellence, Performance and Customer Primacy Bonalbo prides itself on its key strengths

90 Exceeding Expectations Discretion, confidentiality and integrity are key to HLB Afxentiou’s operations

94

{lifestyle}

94 Fabulous Fabergé Not chocolate Easter eggs but priceless jewel-encrusted masterpieces

92 Foreign Tax Credit: Are You Entitled?

What is FTC is how does it affect Cypriot taxation?

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES OF CYPRUS

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marketing

{money}

GOING GLOCAL PROFESSOR LUIS FILIPE LAGES IS AN INTERNATIONALLY RECOGNIZED EXPERT ON MARKET INNOVATION, NEW PRODUCT/SERVICE DEVELOPMENT, INTERNATIONAL MARKET STRATEGY, AND TRANSLATING SCIENCE AND TECHNOLOGICAL INNOVATION INTO CORPORATE GROWTH AND NEW COMPANY CREATION. HE WAS IN CYPRUS EARLIER THIS YEAR PRESENTING A SEMINAR AHEAD OF THE LAUNCH OF HIS FORTHCOMING NEW BOOK THE GLOCALWAVE: BE LOCAL, BE GLOBAL, BE GLOCAL. GOLD SPOKE TO HIM ABOUT THIS AND MUCH MORE.

By Costa Ioannides

Gold: First, let’s get this word ‘GloCal’ out of the way!

Luis Lages: Well, it refers to the concept of being simultaneously both global and local.

Today the world is becoming a global village and so business potential often emerges outside the domestic market. International solutions can often function as feasible alternatives in the domestic markets and, therefore, individuals and companies have to deal new with challenges and grasp new opportunities. This situation raises a critical question: Which tools and frameworks can be used to develop a sustainable strategy which helps individuals and companies to cope with a constantly changing world, while addressing local and global needs?

In my forthcoming book The GloCalWave: Be Local, Be Global, Be GloCal, I provide the tools and frameworks to answer the question of how to be GloCal both as a company and at a personal level. I propose that both individuals and companies need to be GloCal and to constantly rethink their actions and so be at the top of the GloCal wave. I also explain why and how the professional GloCal mindset is linked with the personal GloCal mindset.

Gold: Why is the topic important from a managerial and public policy perspective?

L.L.: I believe that the book might assist managers and public policy makers to develop and

plan more accurate and efficient programmes for domestic and international markets. At a time of highly-saturated domestic markets, selling across different foreign markets can be very rewarding. Indeed, sometimes it is the only way to survive. By having a GloCal vision, companies can extend their products’ life cycle, reduce their overall operating costs (e.g. costs associated with marketing, production, R&D and technology), and use foreign markets to profit from their capacity, while satisfying local needs. Moreover, GloCal companies need to keep a balanced approach between market and technology. If they focus mostly on technology while ignoring market needs, they run a big risk of failure. If the focus is mostly on the market, without having some kind of technological innovation, the risk of failure is also very high. The closer the companies keep

to the middle ground, the easier it will be to get the support of business angels and venture capitalists to enter or expand into markets and succeed. From a public policy makers’ perspective, one of the major challenges is to provide entrepreneurs with support and train companies to bring their products to the international arena. For most national governments, exports are critical because they enhance societal prosperity, help national industries to develop, (L-R, standing: Petros Petrides, Christos contribute to improving productivity and Michael (CEO), create new jobs.

They influence the amount of Constantinos Meivatzis.

Seated: Marios foreign exchange Alexandrou, Maria reserves and the level of imHadjivassiliou) ports a country can afford and contribute to its economic development. The innovative tools and frameworks proposed in my book can also be used for training purposes in a wide range of topics, namely when it comes to encouraging innovation, growth, export development and GloCal sustainability.

EMPLOYMENT OPPORTUNITIES WOULD EMERGE IF THE UNEMPLOYED CHANGED FROM HAVING A PURELY LOCAL OR GLOBAL VISION TO A GLOCAL ONE

Gold: Increasing numbers of international business leaders believe that their future profits are to be found the developing markets (such as the BRICs and Africa). Is assisting western firms to tap into the developing ‘growth’ economies a major target area for you?

L.L.: I agree that there is growing potential for the majority of domestic firms outside the domestic market and in the BRIC coun-

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

tries (Brazil, India, China, and Russia), the Middle East and Africa. I often tell my students that instead of going on holiday to a beach resort, they should take a plane to one of emerging economies where change is happening right now (e.g. Bangalore, Moscow, Shanghai, Guangzhou, Seoul). If we look to those markets, our companies will be able to benefit from economies of scale, economies of scope, and the possibility to offering more affordable prices to the domestic market.

By targeting those markets, the number of potential clients increases as well as the word-of-mouth effect for new products and new markets. The top local and international employees in the market often admire companies with a global vision and try to join these organisations. Additionally, global expertise allows building on international

knowledge to offer high-value solutions to the domestic market. Finally, international experience leads to a stronger brand, higher credibility and greater perceived value.

traditions, and cultures, local companies may become very attractive to local communities and retain highly qualified people who value a local flavour in their daily life.

Gold: Does this mean that you see the developed ‘old world’ as having few prospects for growth?

L.L.: No. We should not ignore the potential and attractiveness of the “old world” and our domestic markets. We live in a world in which there are many interesting local differences to be explored. People are also more willing to defend their positions when aligned with local cultures, habits, traditions and routes. By understanding local specificities, it is possible to provide creative customised solutions adjusted to the needs of local markets. Due to an appreciation of local routes,

Gold: Who are these people?

L.L.: I can use myself as an example. We are all “products” in the marketplace and from time to time I receive really interesting offers – from a financial perspective – to go abroad. Why don’t I go abroad? The reason is very simple. Because salary is not the only variable that counts. There are things in the local market that I find very attractive: things like closeness to the family, good weather, local traditions, values, and local food. I am sure there are many cases similar to mine in Cyprus and Greece. This explains why, in the great majority of countries around the

Luis Lages

L

uis Filipe Lages Ph.D. is Associate Professor of Marketing, Innovation and International Business at the Nova School of Business and Economics, in Lisbon, Portugal. He has been a Visiting Professor in several leading business schools across the globe, teaching in Executive, EMBA, MBA and Masters Programmes. He has entrepreneurial as well as consultancy experience in both business and governmental forums. Within this context he has been involved in the creation of various start-ups as well as in several product and market innovation projects, namely for the Portuguese Ministry of Economy and Innovation as well as for leading European companies across different sectors. His work has been presented to, and put into practice by, executives all over the world including Armenia, Austria, Belgium, China, Cyprus, Denmark, Finland, France, Germany, Malta, Netherlands, Norway, Portugal, Russia, Slovenia, South Korea, Spain, Turkey, UK and USA. He has published more than 100 scientific articles in journals and conference proceedings. His new book The GloCalWave: Be Local, Be Global, Be GloCal will be published later this year

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world, there are at least one or two business schools there are able to attract top professors although they can’t afford to pay American or British salaries. Although these professors have a global training, they value unique things that only the local market can offer.

Gold: This raises the question of whether it is possible to live in one country and still have a GloCal vision.

L.L.: Yes, and as long as we respect and are open to other cultures it is possible. Nevertheless, the markets are becoming global and we never know how bright or dark the future is going to be in the domestic market. In my book I propose that if people do not have a GloCal vision, they should consider being reborn GloCal as a contribution to their pursuit of happiness. If you really wish to become GloCal, it is critical to believe that this is something positive and has or will have a positive impact on our lives in the shortand long-term. In today’s world, does it make sense to create borders across countries? If our target market is global, it is very likely that our market value will be higher because the market size is much larger and it becomes easier to find a better fit between our product and market needs. In my case, although I love Portugal, the fact of having international mobility contributes tremendously to increase my value in the domestic market.

Gold: What are the most common mistakes that foreign companies make when entering a new market/country?

L.L.: Their most common mistake is following an ethnocentric approach and believing that they are the centre of the world. Imposing

GLOBAL EXPERTISE ALLOWS BUILDING ON INTERNATIONAL KNOWLEDGE TO OFFER HIGH-VALUE SOLUTIONS TO THE DOMESTIC MARKET global strategies without considering local specificities is extremely risky. For example, Mattel experienced a major setback when Barbie was launched in Japan, due to the fact that the product did not correspond to the tastes of Japanese girls. The doll’s physical look (white toothy smile, bright blond hair, long legs, big blue eyes, large breasts) did not fit local aesthetic taste. Another recent and controversial case is Vogue, which decided to put ten-year old Thylane Lena-Rose Blondeau on its cover, dressed like a top model in makeup, jewels and high-heels. It worked very well from a “buzz” perspective but the key question is this: What were the repercussions in terms of Vogue’s image across different countries?

Gold: What about a good example of entering a new market?

L.L.: There are some excellent examples of brilliant market penetration strategies. Here’s one: to find out the best way to enter the highly-saturated Japanese PC market, Compaq spent around 4 years conducting market research. The company hired Tom Howard, an international marketing consultant with extensive knowledge of the Japanese market.

MINDSETS

Being GloCal is about a change of mindset. Followers of a GloCal approach should not push their point of view and should not offer local cultures the “complete package”. They are expected to pay attention simultaneously to both local and international cultures. People with a geocentric mindset tend to work well across all cultures because they respect and appreciate behaviours, values, beliefs, and business practices in every country. In his book, Luis Lages argues that it is possible to think and act both globally and locally, which is very different from “think global and act local” (see illustration). By going GloCal, it is possible to benefit from the advantages accrued from being local and being global. “My goal is not to argue that going GloCal is superior to being local or being global,” he explains. “What I’m saying is that it is critical to consider an integrative approach, consider the benefits of thinking and acting locally, thinking and acting globally, and learn more about a GloCal approach as a very feasible alternative.”

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Then it took them 18 months to find the right person to head Compaq Japan – Masaruc “Vic” Murai who used to run IBM, and was well-known in the market and he was very aware of the distribution channels. However, the major challenge for Compaq was to convince Japanese users that a GloCal strategy was good from a consumer perspective. More specifically, that lower costs could be achieved if PCs had a cross-industry, standard architecture with worldwide standards. This way Compaq could offer PCs for a much lower price, i.e. at the same price as the rest of the world.

With the support of different companies (e.g.

Microsoft, Intel) the standard architecture of the Compaq computer became subject to some minor changes to accommodate Japanese characters. Once the product was concluded, Compaq launched a massive advertising campaign to promote the Compaq Prolinea.

While IBM’s comparable model cost 440,000 yen and Apple’s 360,000 yen, Compaq’s was priced at 304,000 yen. This price penetration strategy caused a stir in Japan and forced all the other companies operating in the Japanese market to drop their prices. As a result, some companies controlling the distribution channels, such as NEC, launched a campaign that questioned the credibility and quality of Compaq. Compaq responded straight away with another advertising campaign, in which a NEC machine was directly compared with Compaq Prolinea on all its attributes and it asked why a Japanese buyer should pay more for a NEC machine. From then on, PC firms operating in Japan started applying worldwide standard architectures and they lowered their prices.

Gold: You make the point that the GloCal approach should and can be implemented on both a professional and personal level.

Can you give examples?

L.L.: Certainly. The first example is Dove, a Unilever brand. In 2004, Unilever conducted worldwide market research to see what was common among its customers around the world and which needs were not being satisfied by existing personal hygiene cleaning solutions.

This study aimed to identify women’s perceptions of beauty and was conducted among more than 3,000 women, from 10 countries in Europe, Latin America, North America and Asia. The findings revealed that only 2% of the women surveyed considered themselves beautiful. Additionally, the research revealed that they felt that the existing ads in the sector were “ridiculous” because by using models, they were giving the impression that their products were for perfect, young and beautiful bodies!

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Based on these findings, Dove found a hidden GloCal code, with a strong meaning for over 90% of women that no other company was exploring, i.e. questioning beauty stereotypes.

Its subsequent campaign, using ordinary women of different ages, shapes and sizes, was extremely successful across numerous international markets as well as different age segments.

When it launched in the UK, the campaign increased sales by 700%.

Gold: And on a personal level?

L.L.: Here’s a question: How long should a lunch break last? The answer is that it really depends on the culture. Several years ago, I was teaching an MBA course in Brussels.

One Saturday, the sun was shining and it was the last day of term and as I had no clear instructions concerning the length of the lunch break, I asked them what the common practice was. The class was multi-cultural and the answer was: “It really depends on the nationality of the Professor”. So, I decided to ask how many would prefer a short 30-minute break, to have just a drink and a sandwich and to finish earlier, and how many would rather take a longer (1½ hour) break and have a “proper lunch”. I counted the votes and it was a tie: the same number for each. Now, what would you have done in my situation?

Please note that you are under pressure and you have only 15 seconds to decide! There are various possibilities: you can remain neutral and flip a coin; you can compromise on a 1-hour break (though at the end of the day you might not please anyone); or you can decide as a “traditional” professor and you take the decision yourself! That’s precisely what I did. I voted for a 90-minute “proper lunch”. I followed an ethnocentric approach, assuming that I could be the centre of the world and the audience would react well because I was the professor. The final result was clear: while half the students were happy with my decision, the other half were very disappointed! Now, what I should have done was be geocentric, simultaneously thinking and acting both globally and locally. In other words, I should have invested time in order to be GloCal. In practice, I should have looked for an “in-between” compromise and come to an agreement with the students of different nationalities on a common solution that would please different cultures, e.g., a 45-minute break.

Gold: could the GloCal and strategic tools presented your book help people to overcome problems arising from the current economic situation?

L.L.: Many countries around the world are going through a recession or, if you prefer, a depression period. As a consequence, unemployment rates are increasing and people are complaining that they do not have enough opportunities. It is more likely that these employment opportunities would emerge if the unemployed changed from having a purely local or global vision to a GloCal one. If you are unemployed or looking for a new job, how can you use a GloCal mindset to create business opportunities for the company that you are applying to? I propose that you should come up with a value proposition. You cannot be exclusively focused on yourself (i.e. on being product-oriented, the product being yourself in this case). You have to be market-oriented too. You have to learn about the company and, having discovered what could be the right match between you and the company, convince the people there to accept you for a job interview. Even if a vacancy does not exist, if you are able to demonstrate that you really can offer significant added value to a company, it is very likely that it will create a new post for you.

At the end of the day, every entrepreneur and company wishes to grow. Many companies are looking for the right people for a particular job, but they do not announce it.

Gold: What do you see as the greatest challenges for multi-national businesses today?

L.L.: Multinationals and international companies need to develop GloCal sustainable strategies. GloCal sustainability depends on a company’s ability to perceive interconnections and specificities in the global and local environment and to take a holistic approach towards them. An integrated view of the different parts of the ecosystem and its global surroundings will allow firms to create sustainable growth.

The great challenge is how to achieve a good short- and long-term financial performance while doing well in terms of non-financial indicators (e.g. corporate social responsibility, stakeholders’ relationships, innovation, reputation, ethics). From a company perspective, it is not enough to focus exclusively on the shareholders’ interests or customer needs. All other local and international stakeholders (e.g. employees, suppliers, distributors, governments) are also critical and need to be aligned to build a solid ecosystem that can work towards a common goal. In this way, the company is expected not to focus exclusively on financial performance but also to create value by playing a wider role in society.

Why go GloCal?

Going GloCal allows people/companies to: • Benefit from economies of scale (reductions in the average cost of a single product type) and economies of scope (lowering the average cost in producing two or more products).

• Target high-ceiling industries, while having more affordable prices, achieving higher margins and a higher profit potential.

• Target a larger market and, consequently, have the possibility of growing faster.

• Take advantage of more opportunities.

• Maximize the use of resources and take full advantage of the company’s capacity potential.

• Foster creativity, innovation and organisational flexibility.

• Find stronger solutions by seeing the problem from different angles.

• Present solutions that offer higher value in the domestic and international markets.

Gold: Is this GloCal sustainability also applicable to SMEs, micro-companies, and entrepeneurs?

L.L.: Some may argue that it is much harder for SMEs, micro-companies and small entrepreneurs to come up with sustainable strategies. Personally, I do not think that it is a matter of “thinking outside the box”, but “being outside the box”. You need to be outside to know what is going on inside. This reminds me of a story of a small entrepreneur who founded a Swiss company specialising in the valve industry (purchasing and transforming steel). When expanding his company headquarters, construction workers found water during the excavation process and had to stop. Rather than seeing this as a threat, the entrepreneur saw it as a business opportunity. He built a tank inside the new building, bought Siberian fish and is a successful producer of caviar in Switzerland.

The fish are kept in pure water coming from mountains. In order to grow his fish-farming business, he opened a new restaurant, an online shop, and created a tropical house which presents an exciting combination of sustainably-grown exotic flora, aquaculture and a vivid transfer of knowledge in the middle of the mountains. It all comes down to having the right mindset.

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{money}

USB BANK

FOCUSING ON BUSINESS GROWTH

From Left to right: Demetris Christou Andreas Theodorides Rafael Ajram Nicolas Yiannakas

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

IN FEBRUARY 2011, THE OVERVIEW

By Andreas Theodorides, LEBANESE BANK BLC Deputy Managing Director s a member of BLC BankACQUIRED USB BANK. A YEAR Fransabank Group since LATER, THE BANK IS FOCUSING February 2011, USB Bank adheres to a strategy that ON STRENGTHENING ITS aims at efficient redevelopment and growth, fully aware of the new global and PLACE IN THE MARKET. European economic environment and the

A

resultant highly-demanding economic conditions and challenges.

BLC Bank has operated in Lebanon since 1950 and is a member of Fransabbank, the country’s fourth-largest financial group with a presence in eight countries. In recent years, BLC Bank has exhibited significant and continuous growth as a result of its clear vision and strategic direction. BLC Bank’s main strategic goal is geographical diversification and the strengthening of its position in the Eastern Mediterranean.

The acquisition of USB Bank was a strategic decision based on a wider expansionary policy and it is seen as a decisive move that will not only have positive yields for the BLC Group but will also have a positive knock-on effect on the Cyprus economy in the manifestation of confidence in the local economy, job creation, the retaining of brain power on the island and the generation of added value on a permanent basis.

USB Bank is in the advantageous position of maintaining high levels of liquidity and not having a presence in countries of high economic risk, while maintaining its exposure to Greek debt at minimal, controllable levels. The Bank focuses on business growth and the strengthening of its presence in both the local and international marketplace through its three main Divisions (Retail, Corporate and International Banking), developing products and services and offering solutions to the new demands of the market.

RETAIL DIVISION

By Rafael Ajram, Assistant General Manager, Retail Banking & Marketing

W

ith the impact of the world macroeconomic crisis affecting a majority of consumers, not only in practical terms but also from a mental standpoint, banks have a vital role to play by providing the necessary support to

BLC GROUP’S ACQUISITION OF USB BANK WILL ALSO HAVE A POSITIVE KNOCK-ON EFFECT ON THE CYPRUS ECONOMY

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their customers and always keeping their best interests in mind. To meet this challenge, the Retail Division of USB Bank has set as a priority the further development and provision of an even wider range of competitive financial products and services, tailor-made to meet today’s needs and requirements.

Leveraging innovation, technology, financial muscle and stability, professionalism and excellence, our primary goal at USB Bank is to deliver what matters to each and every customer, while trying to see banking through their eyes. To this end, we focus on our product portfolio and the development of innovative, cost-effective and well-conceived services that cover products such as housing loans, personal loans, car loans, cards, savings, deposits, etc.

In order to deliver and make our promises a reality, we have put together a highlyskilled team of banking professionals. Based in our branches all over Cyprus, our people are committed to working closely with our valued clientele, creating long-term, mutually beneficial relationships. The aim is to help customers plan their finances effectively by offering flexible solutions tailored to their traditional and newlydiscovered needs, thus making complex banking simple. Even now, under the new economic conditions, we aim to respond to the needs of the market with reliability and confidence. We see things from a different angle and, together with our customers, we are building our tomorrow today.

CORPORATE DIVISION

By Demetris Christou, Corporate Banking Manager

I

n the midst of the global financial crisis and its repercussions, which have adversely affected the economy of Cyprus, USB Bank’s Corporate Banking Units are committed to offering superior services by ensuring that they are geared towards addressing clients’ actual financing needs. We consider it to be of paramount importance to offer clients professional advice and facilities which will help them attain their targets. We believe that the Bank’s major achievement is directly intertwined with the financial success of its clients and this, in effect, will solidify a long-term, trouble-free cooperation.

In order to attain such high standards of professionalism, our Corporate Banking Units place particular emphasis on the need to proceed with in-depth financial analyses

THE BANK’S MAJOR ACHIEVEMENT IS DIRECTLY INTERTWINED WITH THE FINANCIAL SUCCESS OF ITS CLIENTS in order to ensure that lending is not effected merely on the strength of the security offered.

Strategies for mitigating risk are carefully implemented and our efforts aimed at increasing the activities of our Corporate Banking Units by attracting customers of sound financial standing are now bearing fruit.

significant natural gas deposits in Cyprus’ Exclusive Economic Zone, coupled with ongoing regulatory changes in Europe which will adversely affect the supremacy of Switzerland, Liechtenstein and other continental offshore centres, Cyprus has the potential to emerge as the preferred onshore financial centre in Europe. Here at the customer-oriented International Business Division of USB Bank, we are ready and waiting to serve you.

INTERNATIONAL BUSINESS DIVISION

BOOK REVIEW

By Nicolas Yiannakas, International Business Division Manager

T

he International Business Division of USB Bank was set up to offer efficient, reliable and secure services to international companies and non-resident individuals.

The Bank’s two International Business Units – one located in Nicosia and one in Limassol – are specialized centres dealing with international customers and offering a wide range of banking products and services to meet their needs. In an effort to enhance our marketing capabilities and to be close to our customers, we are in the process of setting up Representative Offices in strategic locations.

Our Vision is to be recognized by our customers as their point of reference and o become their preferred banking partner in Cyprus. Our Mission is to offer our customers exemplary service and to satisfy their international banking needs.

Our Values are professionalism, discretion and respect for the customer. Our Objective is to create and maintain longlasting, mutually beneficial relationships with our customers.

We seek to leverage on the vast resources of the BLC-Fransabank Group to generate synergies by capitalizing on our in-house capabilities, cross-selling and structuring customized products for customers across geographical regions where we maintain Group operations. We believe that, despite the global economic downturn and having in mind recent developments relating to the discovery of

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DEBT: THE FIRST 5,000 YEARS

BY DAVID GRAEBER (MELVILLE HOUSE PUBLISHING, 2011)

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RRP: £21.99 (£14.29 FROM AMAZON.CO.UK)

nthropology has much to teach us about money, debt and exchange and this book is a good place to start if you want to gain a fresh perspective on the subject. David Graeber is not only a social anthropologist but a self-avowed anarchist and, in addition to his anthropological narrative, he criticises modern-day capitalism and the free market, while questioning the historical myth of the concept of barter as the origin of trade. While economic history states that money replaced the barter system, he argues that there is no evidence to support this. Graeber shows how, for more than 5,000 years, humans have used elaborate credit systems to buy and sell goods and have always been divided into debtors and creditors. In a fascinating exploration of debt and its relationship to money, economic systems and society itself, he clearly wears his heart on his sleeve from the start of the book, where he expresses his contempt for the IMF, to the end where he puts in a good word for the non-industrious poor.

FIDUCENTER Ad for GOLD.indd 1

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financial services

{business}

Striving for Excellence,

Performance

and Customer Primacy BONALBO PRIDES ITSELF ON ITS KEY STRENGTHS By xxxxxxx

B

onalbo is an international group established in 1994, specialising in accounting, corporate and wealth management services. Operating through its offices in Cyprus, Singapore and the UK, the Group serves a diversified clientele from the four corners of the world, ranging from individual entrepreneurs to multinational corporations and funds. Its services are aimed at clients involved in international business or investment activities.

As a member of the International Association of Professional Advisors (IAPA), Bonalbo has an additional local presence in 19 European Jurisdictions.

The Group has strategically located its offices in key locations in order to serve an international client base. Irrespective of the time zone, geographical region or jurisdiction preference, at least one of its offices is always able to offer the solutions that clients are looking for. At the same time, Bonalbo is in the process of assessing further expansion plans in order to enhance its global presence.

The Bonalbo team comprises a group of seasoned professionals, each recruited for their industry experience in the fields of finance, investment, tax, banking and law. The team members have been chosen from world-class institutions boasting a culture of excellence, performance and customer primacy. They have expertise in business areas such as group structuring, e-commerce, tax planning, audit, accounting and finance and are members of ITPA, CFA, ACCA and numerous other bodies.

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

THE TEAM

MEMBERS HAVE BEEN CHOSEN FROM WORLD-CLASS INSTITUTIONS BOASTING A CULTURE OF EXCELLENCE, PERFORMANCE AND CUSTOMER PRIMACY

KEY STRENGTHS AND CORE COMPETENCIES

In a booming arena crowded with corporate service providers, the choice is endless. The question is what the right choice should be.

Bonalbo prides itself on its key strengths which differentiate it from its competitors.

INDEPENDENCE

Since its inception in the corporate service arena, Bonalbo has maintained its independence, the importance of which cannot be overstressed. Unlike most local providers who attempt to be a one-stop shop, offering audit, accounting and legal services under

one roof, Bonalbo maintains good relationships with all the necessary professionals in order to make sure it receives the best and most impartial service.

STAFF

Bonalbo’s staff are its greatest asset. The

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commitment to its clients, associates, staff, community and environment is to guarantee their satisfaction and to go beyond their expectations.

SERVICES

• Trust and Corporate Services • Company formation in over 40 jurisdictions • Competent directorship and domiciliary services • Assisting clients in office selection and the recruitment of staff • Payroll services • Personalised Trust • Merchant banking assistance • Bank account opening and administration

WEALTH MANAGEMENT

In combination with its trust and corporate services, Bonalbo works closely with numerous private banking institutions and licensed asset managers, who may assist clients in placing their excess funds.

Group takes pride not only in the quality of the staff it employs but in their continuous development. Most members of staff are holders of either an accounting or legal qualification, allowing them to gain membership of their respective professional bodies. All staff, irrespective of whether they are directors or administrative assistants, undergo rigorous training programmes to keep them abreast of the latest technical and corporate developments.

ETHOS

The very nature of the profession places great emphasis on trust and accountability. All the Group’s offices are managed by qualified Chartered Accountants, regulated by their professional bodies. Business is conducted to the highest standards of confidentiality, not only externally but within the offices as well.

QUALITY

Bonalbo pays attention to both the big picture and the minor details in all aspects of its work. All administered corporate documents are carefully prepared and reviewed to guarantee their technical accuracy and aesthetic perfection.

COMMITMENTS

Bonalbo want its relationships to be both mutual and lifelong. Every client, irrespective of size, is assigned a dedicated member of staff who looks after their affairs. The Group’s

THE GROUP’S COMMITMENT TO ITS CLIENTS, ASSOCIATES, STAFF, COMMUNITY AND ENVIRONMENT IS TO GUARANTEE THEIR SATISFACTION AND TO GO BEYOND THEIR EXPECTATIONS

As part of the Group’s wealth management offering, it provides the following services: • Strategic to financial and tax planning • Investment review • Banking arrangement review • Wealth transfer planning • Financial record-keeping • Real estate management • Philanthropic and art advisory services • Yacht services • Asset finance

FUND SETUP AND ADMINISTRATION

Bonalbo has carried out considerable work around funds set up in Cyprus and other key jurisdictions such as the British Virgin Islands, the Cayman Islands, Gibraltar, the Isle of Man, Luxembourg, Malta, etc. The Group prides itself on having put together some complex structuring.

TAX CONSULTING

The Group’s personnel has extensive experience in the field of tax consulting and, in addition, it maintains strong links with market leaders in this field, giving clients the most impartial advice.

info: Savvas Charalambous, Business Development, Tel: +357 2284 6000, Direct: +357 99366646,Fax: +357 2284 6111, Web: savvas.charalambous@bonalbo.com. Offices: Cyprus: 3rd Floor, Methonis Tower, 73 Arch. Makarios Ave, P.O. Box 2900, CY-2084, Nicosia, CY-2084, Nicosia, Tel: (+357) 22846000. Singapore: 9 Penang Road, #08-13 Park Mall, P.O. Box 058, Singapore 910931, Tel: (+65) 63320190. United Kingdom: 2-4 Great Eastern St., London, EC2A 3NT, United Kingdom, Tel: (+44) 2072472825

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SPEAKING WORDS OF WISDOM

WHEN ECONOMIST AND ANALYST FIONA MULLEN SET UP HER OWN COMPANY, SHE NAMED IT SAPIENTA ECONOMICS, AFTER SAPIENTA, THE LATIN WORD FOR ‘WISDOM’. A RESIDENT OF CYPRUS FOR THE PAST DECADE AND ONE OF THE FIRST RECIPIENTS OF A STELIOS AWARD FOR BUSINESS COOPERATION FROM SIR STELIOS HAJI-IOANNOU, SHE IS FREQUENTLY QUOTED BY THE INTERNATIONAL AND LOCAL MEDIA AND IS IN GREAT DEMAND THANKS TO HER EXPERTISE ON THE ISLAND’S ECONOMY. SHE SPOKE TO GOLD ABOUT THE CHALLENGES FACING CYPRUS OVER THE COMING YEARS.

By John Vickers. Photography by Jo Michaelides

Gold: How do you see 2012 for Cyprus?

Fiona Mullen: I think, unfortunately, that it it’s going to be worse than 2011. All the indications are that consumer spending is really going to be hit this year, due to the increase in VAT, skyrocketing electricity prices, unemployment and, for those in the public sector, less take-home pay because of their higher social security contributions and the freeze in the Cost of Living Allowance.

Gold: Is the 2% rise in VAT really that significant?

F.M.: It would appear so. Since everybody knew that VAT was going to go up in March, I would have expected to see an acceleration in retail sales in December 2011 but, in fact, they fell by 6.5% compared with the same period the previous year. So the market is already depressed and this increase is just one more thing on top of that. Prices are going up all over the place. It’s not just VAT but the electricity problem too.

Gold: So if 2012 is going to be worse than 2011, when do you expect things to start improving?

F.M.: Assuming that there won’t be anything nastier coming from Greece than everything

GROWTH IN THE PROFESSIONAL SERVICES SECTOR ACTUALLY ACCELERATED IN THE FOURTH QUARTER OF 2011 we already know about, then even the second half of this year should look better than corresponding period last year. What worries me, however, is that through most of the dips in the Cyprus economy, consumers have always carried on spending but this time they haven’t. This is evident from the number of shops that have closed. The interesting – and positive – thing, however, is that those sectors which have tended to be competitive and productive are still growing. Growth in the professional services sector actually accelerated in the fourth quarter of 2011 and there has been some slight growth in pharmaceuticals too. The first month of this year saw 7.1% growth in tourism so even if it was partly down the ‘Arab Spring’ effect, it looks as if it may carry on. The fact that Cyprus now has two airports that look as if they belong to the 21st century probably helps! So things should

definitely show an improvement in 2013 if not before but, of course, we’re not going to get back to 4% growth rates any time soon.

Gold: Is this year likely to be any worse for Cyprus than for the other members of the Eurozone, apart from Greece?

F.M.: Not necessarily but because we seem to lag behind the rest of Europe in our reactions – we dipped later than everybody else – we’re still experiencing a recession while everyone else seems to have come out of it. I think a specific problem for Cyprus is the issue of competitiveness. In 2008, unit labour costs in Italy, Spain, Ireland, Portugal and Cyprus were going up while Germany’s were going down, meaning that Germany’s competitiveness was getting better while ours was getting worse. The country’s unit labour costs have to improve relative to everybody else’s and in the eurozone economy, the only way to fix such a problem is by implementing so-called “internal devaluation”, which basically means that wages don’t go up for a long time. Also, though it’s very unpopular to say so, wage indexation doesn’t help in this context. In the past it may have brought about good industrial relations in Cyprus but since 2004 the labour market has been open to the whole

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

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cyprus

of the EU. Ever since then, even though the unemployment rate has tended to fall slightly whenever growth has improved, it has never dropped back to the low levels it was at before 2004 and I think that’s because the market has shown that it doesn’t want relatively expensive Cypriot labour. This is what’s behind the present situation. I am told that two thirds of those registered as unemployed are Cypriots, not people from other countries. So wage indexation may work in the context of a closed or semi-closed labour market but not as things are today. Also, when you know that public sector workers earn double what you do, your expectations start increasing too.

Gold: Is the outsider’s view of the Cyprus economy really justified when we compare it with that of other EU countries?

F.M.: Yes and no. Last year the Governor of the Central Bank gave a lecture during which he showed some debt-to-GDP ratios without revealing the names of the countries to which they referred. One of them was over 200% and, of course, it was Japan which has an AAA rating. Because Cyprus is small, the Rating Agencies probably don’t spend much time on it and they are likely to get their least experienced person to deal with it. On the other hand, while it’s true that Cyprus’ debt is ‘only’ 70% of GDP, just a couple of years ago it was around 40-50% and because we have a small economy it can rise a lot and fast so, in that sense, the downgrades and the negative assessments are understandable.

Gold: What’s next for Cyprus’ sovereign rating?

F.M.: One problem is that the rating reflects what’s going on in the eurozone as well as what’s going on in Cyprus. It looks as if the Cyprus side of things is being fixed but we’re still at the mercy of what happens in the eurozone.

Gold: How do you view the package of austerity measures that was passed in December?

F.M.: I think it was a good package of measures, even though it came far too late but at least it finally did come. I doubt that the

FIONA MULLEN

F

iona Mullen has been providing economic analysis and research to an international audience for nearly 20 years. In 2006, she founded Sapienta Economics Ltd to provide independent analysis on a range of European and Middle Eastern countries. She has written extensively on the economics of Cyprus and has been the Cyprus contributor for the Economist Intelligence Unit (EIU) since 2001. She has also served as economy adviser to the Special Adviser to the UN SecretaryGeneral on Cyprus, Alexander Downer.

Prior to living in Cyprus, Mullen was Director of the flagship Country Reports and Country Profiles and Senior Europe Analyst at the EIU. In 2009 Fiona Mullen was awarded the Stelios Haji-Ioannou Award for Business Cooperation in Cyprus together with her Greek Cypriot and Turkish Cypriot associates, Praxoula Antoniadou Kyriacou and Özlem Oguz.

She is the author of a number of publications on Cyprus and its economy.

Most recently, in 2011, she was one of the editors of Cyprus: An Island in Europe (I.B. Tauris) while her forthcoming book (2012) is Promise of Fortune? Hydrocarbon Exploration Offshore Cyprus, written with Ayla Gürel. Fiona Mullen is a regular contributor to Gold.

government is going to manage to get the debt below 3% of GDP this year, partly because I don’t think GDP is going to grow whereas the government thinks it will. One of the most important measures concerned civil service pensions, abolishing long-held privileges so that public sector workers start to contribute like those in the private sector, which has to be a good thing. On the other hand I think it’s a shame that so much was laid on businesses.

The €350 charge may not seem like a lot but for small businesses in particular, things are a lot tougher this year so it’s one more tax that has to be paid, like the dividend tax if they make a profit. The government was right not to change the 10% basis for corporate tax

CYPRUS SHOULD BE LOOKING AT WAYS TO SET ITSELF APART FROM EVERYBODY ELSE. IT NEEDS TO BE DOING SOMETHING MORE THAN JUST REGISTERING COMPANIES

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

because we are gradually losing our reputation as being a low-tax jurisdiction because of the rise in VAT, etc., and that’s a shame.

Gold: Cyprus now has its own gas and possibly oil reserves too. Are they going to turn things round?

F.M.: Eventually but not today, not next year or the year after that. If I had to put money on it I would say that it will be 15 years before Cyprus actually makes any money out of natural gas. Bear in mind that it takes an absolute minimum of 10 years to build an LNG plant and it could take longer depending on the size.

However, within about 3 years we should start seeing investment in the wider economy, based on future expectations regarding natural gas.

Gold: Can the Cypriot banks recapitalize successfully?

F.M.: I think it’s still an open question. Bank of Cyprus should be able to manage without having to ask for help from the government or, if it does, it won’t be such a huge amount.

Hellenic Bank is relatively small, as is the amount it needs to find so it will be fine. It’s comforting that Laiki Bank has said that there has been what it called “serious interest from a number of credible strategic investors”. The absolute worst-case scenario for Laiki is that it never gets any of its debts back from Greece, which is half of its loan portfolio, and that will eat into its profits year after year after year. In order for the banks to keep their capital ratios at the right levels, they need to have enough assets but the risk weighting of the assets is also important so they’re going to be much more risk-averse than they were before.

Gold: As the banks don’t appear to be lending, where are the profits going to come from in the banking sector?

F.M.: They are still lending but certainly not as much as before. All three main banks reported an increase in their interest income last year and that’s because they’re basically charging more for loans and paying us less for our deposits so they are making their profits on the interest rates spread. They all made a profit before the write-offs. And at the moment, where are people going to put their money if the euro and European stocks keep falling? It might as well be deposited in the bank and earn 3% interest.

Gold: If the government asked you advise it on how to get the economy back on track, what is the first thing you would propose?

F.M.: Good question! The first thing it needs

to do is speak with one voice on the energy issue. We need to know who’s in charge and what the policy is. Are we going for an LNG plant or not? All of these questions need to be answered clearly because at the moment Cyprus is earning a reputation for not being able to make up its mind and for lots of in-fighting.

It may be fairly easy to set up a business in Cyprus but the island has started to lose out to places like Malta because it’s not fast enough at registration and all the related procedures. We still have paper files for company registration which is crazy! In a talk I gave at the London School of Economics recently, I made the analogy that Malta is like Facebook whereas Cyprus is MySpace. Yes, we may have been the first but we’ve since been overtaken, particularly in the area of funds, for example. One of the reasons I gave that talk was to highlight the fact that the professional services sector was growing last year when everything else was declining and it is still growing but the government is not really paying attention to it and giving it all the tools it needs.

THINGS SHOULD DEFINITELY SHOW AN IMPROVEMENT IN 2013, IF NOT BEFORE, BUT WE’RE NOT GOING TO GET BACK TO 4% GROWTH RATES ANY TIME SOON Gold: Before coming to Cyprus in 2001, you were a Senior Analyst for the Economist Intelligence Unit (EIU). How important is it to be a resident of the country for which you are providing economic analyses?

F.M.: I think it does make a difference. In addition to its in-house analysts and editors, the EIU likes to have someone in each of the countries that it covers. It’s important because it covers politics and it has always placed an emphasis on politics, knowing that politics dictates policies and policies affect the economy. People who are actually based in the country will invariably have a better handle on the politics. I used to cover Bahrain and I always felt that I wasn’t doing as good a job as I was doing on Cyprus, mainly because I wasn’t there to feel whether things were getting better. Statistics don’t give the full story. This is probably another reason

why people get upset with the Rating Agencies because they feel that US- or UK-based analysts can’t see the real picture in Cyprus or elsewhere for that matter.

Gold: In 2009 you were awarded the Stelios Haji-Ioannou Award for Business Cooperation in Cyprus together with your associates Praxoula Antoniadou Kyriacou and Özlem Oguz. What was it for?

F.M.: It was for the three “The Day After” reports we wrote in 2008 in which we tried to put a figure on how much a solution of the Cyprus issue would be worth for business. At the time there had been a lot of publicity about the potential negative aspects so, taking the position that the approved settlement would not bankrupt the island, we looked at the opportunities that would arise from it. We prepared three reports: the first one looked at new opportunities; the second was settlement-related in that it considered issues like the rebuilding of Famagusta and how much investment that would bring in; and the third one was about how much Greece and Turkey might benefit.

We were given the prize in 2009 so it was really based on our first and second reports.

What people liked about them, even if they disagreed with the conclusions, was the fact that we made it perfectly clear how we had reached those conclusions. If you don’t agree with the logic that’s fine but at least you can follow it. Economists will always have different opinions anyway!

Gold: Can Cyprus make the transition from being a regional business centre to an international financial centre?

F.M.: With the right help it can. It has to.

It needs to do more than just administrate because sooner or later that job will be done by well-educated Indians. The House of Representatives has finally passed the amended Law on Trusts, which is very important, but Cyprus should be looking at ways to set itself apart from everybody else. It needs to be doing something more than just registering companies. It lost out in the tourism sector by not moving when everyone else did and there is a slight risk of the same thing happening in the professional services sector. Yes, Cyprus has a highly-educated workforce, it’s a nice place to live and the people are friendly, which is why foreigners such as me end up living here but don’t forget that Malta has the same attractions too. All the elements are in place but I’m not sure whether we should

try to be “all things to all men” or whether we should just try and find a good niche. I think the government is still not paying the right amount of attention to the professional services sector and there is a risk that there will be so much focus on energy that this one will be neglected. But it is certainly a sector with a great deal of potential. We just need to give it some assistance.

B BOOK RREVIEW HOW THE WEST WAS LOST: FIFTY YEARS OF ECONOMIC FOLLY - AND THE STARK CHOICES AHEAD

BY DAMBISA MOYO (PENGUIN, 2012)

N

RRP: £9.99 (£6.49 FROM AMAZON.CO.UK) amed by Bloomberg as one of the top business books of 2011, this is the second title by Dambisa Moyo, a former employee of Goldman Sachs and author of the bestselling Dead Aid. In it she argues that over the last fifty years, the most advanced countries on earth have squandered their advantage by ravenously consuming and building up debt instead of investing. In particular, she examines how America’s decisions and choices around capital, labour and technology have resulted in an economic and geopolitical seesaw that is now poised to tip in favour of the emerging world. She says that, by rethinking many of the things we take for granted, it may yet be possible for the West to get back into the race.

Moyo’s proposed solution for the US is a radical one: trade protectionism and debt default. She argues that America would fare much better and that the devastation it would impose on China as an exporter and creditor would be good for many countries.

Controversial but fascinating.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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recruitment

{tax&legal}

Demand in the Legal & Corporate Services Sectors Continues

W

ith a booming corporate services sector in Cyprus there has always been a skills shortage for experienced professionals within the corporate services sector and this has been particularly acute with regards to lawyers.

There is not only a shortage of senior lawyers with corporate experience to meet the demand but there is also a shortage of junior lawyers with corporate experience. Many junior lawyers have been unable to gain a high level of experience as they have not been able to secure employment on qualification as employers have cut back on training contracts for recent Law graduates both in the UK and Cyprus. This in turn has created a shortage of lawyers with 2-5 years post-qualified experience as fewer candidates come through the route of qualification.

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

THE NUMBER OF EXPERIENCED CORPORATE LAWYERS WHO ARE QUALIFYING AND ARE LOOKING FOR THEIR FIRST MOVE AFTER QUALIFICATION IS ON THE DECLINE. COMPANIES ARE SUPPLEMENTING THE LACK OF LAWYERS

BY INCREASING THE FLOW OF CANDIDATES RECRUITED TO LEGAL SUPPORT POSITIONS BUT WILL THIS BENEFIT THE LEGAL PROFESSION IN THE LONG TERM? “There is demand in the market and a shortage of experienced lawyers that are job hunting, particularly with 2-5 years post qualified experience,” confirms Donna Stephenson, a Director of GRS Global Recruitment Solutions. “In addition, there are very few recently qualified lawyers searching for jobs who have gained experience and exposure to corporate law, which is the main discipline that is in demand. ”When a Greek- and English-speaking lawyer with at least 2-3 years of good quality experience gained within the corporate law field commences their job search, they can achieve several good job offers if they are a talented candidate,” says Sophie Aristodemou, a Senior Consultant at GRS Nicosia.

“We are seeing that candidates are often interviewing at multiple firms, so our clients have to move more quickly to secure accepted offers from the best candidates,” she notes.

The opinion at GRS is that lawyers tend to move jobs less than other professionals and the number of traineeships has severely declined.

This is a potentially worrying situation for the supply of talent to support the boom of the corporate services and legal sectors in Cyprus.

One of the reasons for the declining trend in trainee positions has been cited as economic.

One Partner in a leading UK law firm said that his company had not offered any training contracts over the last three years to Law School graduates as they become an expensive

A WELL-TRAINED PARALEGAL OR LEGAL SECRETARY CAN IN SOME CASES DO 60%-70% OF A QUALIFIED LAWYER’S WORK AND COMMAND HALF THE SALARY

overhead when there is increased competition and margins are being driven down.

He explained that they prefer to train up secretaries and administrators to paralegal positions since, effectively, this is cheaper than training Law School graduates to become qualified lawyers. The expectations upon qualification are that their salary will rise quite substantially, making it basically uneconomic to train and develop them, particularly when a well-trained paralegal or legal secretary can in some cases do 60%-70% of a qualified lawyer’s work and command half the salary.

Is training corporate administrators or paralegals to take on the responsibilities of qualified lawyers a long-term solution? Georgia Michaelides, Branch Manager of GRS’s Limassol office, believes that it appears to be more of a short-term solution where the financial/ economic goal is achieved today.

Michaelides’ opinion, however, is that lawyers are still not being trained and developed to the level required in the market to be able to successfully fill the positions requiring 2-3 years post-qualification experience in corporate/company law. With demand outweighing supply, is this in turn aiding the increase of salaries for the legal profession as less experienced qualified lawyers will be available?

Statistics provided by GRS show that in Cyprus there has been a rapid rise in demand for legal assistants and corporate administrators with GRS confirming that 9% of their placements made during 2011 were legal support and corporate administration candidates, which reflects a growth of 33% on 2010.

In Cyprus more could be done to create opportunities to attract legal graduates and non-graduates to the legal and corporate services sector, and there needs to be buy-in from Law firms to give their legal trainees or legal assistants a rotation within the corporate department if Cyprus is to generate a skill set to support the growth of the sectors in the future.

BOOK REVIEW POLITICAL ECONOMY OF CORPORATION TAX: THEORY, VALUES AND LAW REFORM

BY JOHN SNAPE (HART PUBLISHING, 2011)

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RRP: £60 (£53.13 FROM AMAZON.CO.UK) uch writing on corporation tax tends to be inaccessible to lawyers, political theorists and political economists. John Snape, Associate Professor of Law at the University of Warwick, seeks to contribute to a new way of understanding and conceptualising the reform of the law relating to corporate taxation. Drawing on important developments in public law scholarship, the study combines elements of political theory and political economy. It advances a new interpretation of corporation tax law as an instrument of rule, through the maximisation of a nation’s economic potential. Snape shows how corporate taxation belongs at the centre of any discussion of economic globalisation, not only because of the potential of national tax systems to influence inward investment decisions but also because of the potential of those decisions to shape the public interest that those tax systems might embody.

Following public law and politics models, the book looks afresh at the impact of Britain’s political institutions, of the processes of its representative government and of the theory that moulds and orders the values that the corporation tax code contains.

info: Article courtesy of Global Recruitment Solutions, from the Cyprus Recruitment Index, Issue II, 2012 THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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taxation

Exceeding {tax&legal}

Expectations

H

LB Afxentiou, a member of the worldwide HLB network, is one of the largest accounting and financial consulting organisations in Cyprus. Established in 1997, the firm became a member of the HLB International network two years later and now maintains offices in all the island’s main towns.

HLB Afxentiou’s client base includes international bank branches and credit card services companies, a variety of businesses in the entertainment industry, media and film production and distribution, the oil and gas industry, financial services and investments, real estate investment in the Russian Federation and the construction and building industry, including companies involved in 5-star hotel construction in Russia, the airline industry, including airline fuel, Russian cargo and passenger airlines and aircraft leasing, the international shipping industry and the educational services industry.

HLB Afxentiou’s specialised departments provide services in audit & assurance, financial advisory, business consulting, taxation and accounting to a wide range of businesses from small owner-managed enterprises to large multinational groups and listed companies. The firm’s team, whose members are fluent in Greek, English, Russian, Bulgarian and Ukrainian, is made up of multidisciplined professionals who place great emphasis on having a thorough understand-

DISCRETION, CONFIDENTIALITY AND INTEGRITY ARE KEY TO HLB AFXENTIOU’S OPERATIONS

ing of their clients’ business and needs. HLB Afxentiou provides services to a diversity of clients engaged in a wide range of operations, both locally and internationally and has affiliated entities which offer professional services, including corporate, trust and management services. “Our objective is to meet our clients’ needs by building a strong business relationship with them and exceeding their expectations by providing them with everything they need to achieve their business goals, “says Marios Hadjihannas, a Member of the firm’s Board of Directors HLB Afxentiou’s tax team provides extensive knowledge in the application of international tax legislation and its clients have the opportunity to take advantage of the firm’s discretion, confidentiality and integrity, its depth and breadth of experience and its international professional affiliations.

“One of the hallmarks of the firm and its staff is the close attention paid to each individual client’s needs as well as the personal interest shown in their development,” explains Hadjihannas. “We consider it our responsibility to know and understand our clients’ challenges and aims and to help them achieve their goals. Irrespective of the size of the client’s business, our professional staff can guide them to make successful and well-considered decisions for the future.”

CORPORATE TAX AND TAX COMPLIANCE

Utilising the extensive experience and expertise of its professional staff in the tax

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

team, HLB Afxentiou offers the effective management of a company’s tax requirements both locally and internationally.

The firm provides high quality and individually-tailored tax management, business support and tax advisory services to the entire range of clientele in its base.

Cyprus is now established as an international financial centre, used by an everincreasing number of foreign entities.

Companies need to be more innovative and to pay close attention to tax planning and international tax considerations in order to minimize their tax liabilities.

Close control over the tax process and its application to a client’s business activities results in efficiently-executed and effective benefits. “Our team makes the most of its close relationship with the local tax authorities, it provides professionally considered and prepared returns, advises our clients on tax risks, tax accounting and tax calculations, and gives priority to the tax approach, resulting in optimum benefit for the clients’ business,” says Marios Hadjihannas.

The firm’s professional tax team prepares and submits tax computations, negotiates clients’ agreements with the Cyprus tax authorities, provides continuous reviews, tax planning and strategy to make the best use of capital allowances and other available reliefs and deferments. HLB Afxentiou provides advice on major business transactions including mergers, takeovers, corporate reconstructions and the formation of trusts.

From left to right: Zenonas Kalogirou (Associate in the Tax Department), Marios Hadjihannas (Member of the Board/Head of Tax Services), Elena Violari (Senior Associate in the Tax Department), Costas Afxentiou (CEO/Managing Partner), Nikki Theisen (Senior Associate in Corporate Services and the Tax Department)

INTERNATIONAL TAX PLANNING

HLB Afxentiou provides one-on-one tax advice and assistance to its clients. “As specialists in the inner workings of the structure of the tax system in Cyprus, our professional staff can ensure that clients enjoy all the benefits available to Cyprus and international businesses,” points out Marios Hadjihannas.

“Our familiarity with the double tax treaty system and our close working relationship with both the local tax authorities and a widespread network of international tax specialists puts our firm in a prime position to guarantee that our clients achieve excellent results in their international corporate tax planning. By utilising the Cyprus tax system and available double tax treaties, we are able to implement successful international tax planning from within our clients’ corporate structures in order to maximize their tax benefits.” Up-to-

COMPANIES NEED TO BE MORE INNOVATIVE AND TO PAY CLOSE ATTENTION TO TAX PLANNING AND INTERNATIONAL TAX CONSIDERATIONS IN ORDER TO MINIMIZE THEIR TAX LIABILITIES date advice on tax planning and tax compliance ensures that clients avoid the pitfalls of the law, benefit from any changes in the law and legally mitigate their tax liability.

VAT SERVICES

HLB Afxentiou recognizes that Value Added Tax can be a significant burden on business transactions and carries substantial risks. Its VAT division is in a

position to handle any VAT requirements clients may have including the registration of companies with the local VAT authority, advising on the maintenance of VAT records, liaising with the VAT authorities, carrying out VAT planning and implementation and completing all necessary VAT compliance work.

PERSONAL TAX

The firm’s professional tax team prepares and submits individual returns to the Inland Revenue Department and provides specialist advice on capital gains tax, inheritance tax and personal financial planning. Members of the team are able to negotiate with the local tax authorities on behalf of clients regarding their personal tax affairs, including the preparation and submission of forms, the drafting of objections and liaising with the authorities.

THE INTERNATIONAL INVESTMENT, FINANCE & PROFESSIONAL SERVICES MAGAZINE OF CYPRUS

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ftc

{tax&legal}

Foreign Tax Credit: Are You Entitled?

WHAT THE LAW PROVIDES FOR

By Michalis Zambartas

C

ypriot tax advisors often face difficulties in calculating their clients’ Foreign Tax Credit (FTC).

As a consequence, in December 2011, the Income Tax Authorities issued Circular 2011/14 which provides an analysis and practical guidance for the calculation of FTC, thus complementing Articles 35 and 36 of the Income Tax Law 118(I)/2002.

However you may be wondering what precisely FTC is and, more importantly, how it affects Cypriot taxation. I will attempt to address these questions below.

Income received in Cyprus from abroad is, in some cases, taxed in Cyprus. However, the Cyprus tax liability may be reduced in the form of a credit if tax has also been paid in the source country. For instance, any tax paid on rental income received by a Cypriot tax resident from his properties abroad is calculated as a credit in the computation of his overall tax liability in Cyprus.

In the absence of such a principle, we would have double taxation, i.e. tax paid on the same income abroad and in Cyprus. Section 34 of the Income Tax Law 118(I)/2002 provides that the Cyprus Government may enter into treaties for the avoidance of double taxation (DTT(s)) with other governments. For example, Article 22.2(a) of the CyprusLebanon DTT states: “Subject to the provisions of Cyprus Tax Law regarding credit for foreign tax, there shall be allowed as a credit against Cyprus Tax Payable in respect of any item of income derived from Lebanon…. the Leba-

Y CYPRUS TAX LIABILIT ED IN ON INCOME RECEIVRO CYPRUS FROM AB IN AD E MAY BE REDUCED IFTH TA FORM OF A CREDIT ID INX HAS ALSO BEEN PATRY THE SOURCE COUN nese Tax paid under the Laws of Lebanon” Accordingly, Section 35 of the Income Tax Law 118(I)/2002 provides for “foreign tax” credits for the income received

by Cypriot tax resident physical or legal persons. The aforesaid section defines “foreign tax” as “…any tax payable at the country with which a Treaty was concluded which under the Treaty shall be allowed in the form of a credit” Further, Section 36 of the same law allows for FTCs even if no DTT has been concluded with the country where the foreign tax arises, following a similar approach to that of Section 35.

In most cases, the FTC is calculated by dividing the total tax chargeable in Cyprus (prior to the tax credit) by the total income of the Cypriot tax resident and then multiplying it by the foreign income under examination. Once the FTC is determined, it is deducted from the tax liability of the Cypriot tax resident. It should also be noted that where different foreign incomes have been received by the Cypriot tax resident (e.g. foreign interest income from loans and foreign rental income), the formula is applied separately to each of these incomes.

The same applies if the foreign incomes are derived from different countries.

A special calculation is needed in situations where dividend income is received from foreign companies and the applicable DTT imposes a withholding tax in the source country. In such a case, the total income of the Cypriot tax resident shall include the underlying tax on the profits of the foreign company and not the actual dividend income. It is assumed that no such calculation is applicable in similar situations where no DTT is in place, since both section 36 of the Law and the Circular are silent on this matter.

Similarly, in accordance with s.3(9) of the Special Defence Contribution law 117 (I)/2002, the FTC is also granted on foreign tax paid on income which is subject to the Special Defence Contribution in Cyprus.

There are some limitations to the application of the FTC however, and these are that any FTC granted shall not in any case be greater than the total tax payable by the Cypriot tax resident in each tax year under examination. The Cypriot tax resident has the option to choose whether or not to claim FTC in a particular tax year. In any case a claim for FTC must be requested within 6 years from the end of the tax year in which the foreign tax was paid.

If you are receiving income from abroad, you should consult your tax advisor immediately in order to see whether you qualify for FTC. You will need to obtain a certificate from the foreign tax authorities translated into Greek or English showing that you have either paid or had tax withheld for rent, interest, dividends or any other income.

info: Michalis Zambartas (Tax & Legal Associate-Eurofast Taxand), Michalis.zambartas@eurofast.eu ,Tel. +357 22 699 222, www.eurofast.eu

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

{lifestyle}

FABULOUS FABERGÉ

fabergé eggs

F

abergé eggs, made from precious metals or hard stones, decorated with combinations of enamel and gemstones, have become a symbol of luxury, and are regarded as masterpieces in jewellery. When we refer to a Fabergé egg, we typically mean one of the thousands of bejewelled eggs made by the House of Fabergé between 1885 and 1917, the most famous of which were the Imperial Eggs made for the Tsars Alexander III and Nicholas II of Russia.

The House of Fabergé was founded in 1842 in St Petersburg by Gustav Fabergé but it was made legendary by his son, Peter Carl Fabergé, who was appointed as goldsmith to the Russian Imperial Court and became famous for producing the legendary series of ingenious Imperial Easter Eggs.

The creative and entrepreneurial genius behind the now world-renowned company, was born in 1846 and apprenticed as a boy to his goldsmith father. He was educated in St Petersburg and Dresden and later travelled extensively, immersing himself in the cultural delights of the Grand Tour, including the Medici Renaissance treasures in Florence. He studied in Paris and received expert tuition from goldsmiths in France, Germany and England. The series of lavish Easter eggs that he created for the Russian Imperial family between 1885 and 1916 is the artist-goldsmith’s greatest and most enduring achievement. The eggs are certainly the most celebrated and awe-inspiring of all of Fabergé’s works of art. Of the 50 made, 42 have survived. A further two eggs, the Constellation and Karelian Birch,

TODAY WE MAY ASSOCIATE EASTER EGGS WITH CHOCOLATE BUT A CENTURY AGO PETER CARL FABERGÉ WAS CREATING BU PRICELESS JEWEL-ENCRUSTED MASTERPIECES By Nathalie Kyrou were planned for 1918 but not delivered as Nicholas II and his family were assassinated that year following Nicholas’ abdication the previous year.

The story begins with the first Fabergé egg ever to be crafted. It was created for Tsar Alexander III as an Easter present to his wife, the Empress Fedorovna, in 1885. It is believed that the Tsar, who had first become acquainted with Peter Carl Fabergé’s virtuoso work at the Moscow Pan-Russian Exhibition in 1882, took his inspiration for the piece from an egg owned and cherished by the Empress’s aunt, the Princess of Denmark. Easter was (and is) the most important religious festival in the Russian Orthodox Church calendar and a centuries-old tradition of taking hand-coloured eggs to church to be blessed and then presented to friends and family had evolved through the years into the custom of presenting valuable, bejewelled Easter gifts to the highest echelons of St Petersburg society. Tsar Alexander III had the idea of commissioning Fabergé to create a precious Easter egg as a surprise for the Empress and the first Imperial Easter egg thus came about.

Fabergé’s first Imperial Egg was known simply as the Hen egg. Crafted from gold, its opaque white enameled ‘shell’ opened to reveal its first surprise: a matte yellow gold yolk, which itself opened to reveal a multi-coloured gold hen.

This also opened and inside was a minute diamond replica of the Imperial Crown from which a small ruby pendant was suspended (these have been lost over time).

The Empress was so delighted by the gift that the Tsar made Fabergé ‘Goldsmith by Special Appointment to the Imperial Crown’ and commissioned another egg the following year.

This was the starting point for a tradition that would continue for 32 years and

produced the most opulent and captivating Easter gifts the world has ever seen.

The eggs were private and personal gifts, and the whole spectacular series charts the romantic and tragic story leading up to the end of the mighty Romanovs in 1917.

Fabergé, by then head of the House, was given complete freedom in the design and execution of future Imperial Easter Eggs (the Tsar had a hand in the creation of the first one only) and he made the most of his imagination, talent and entrepreneurial instincts. Each egg took a year or more to make, involving a team of highly skilled craftsmen working under conditions of utmost secrecy. According to the Fabergé family tradition, not even the Tsar knew what form they would take – the only requirement was that each one

THE WHOLE SPECTACULAR SERIES OF IMPERIAL EGGS CHARTS THE ROMANTIC AND TRAGIC STORY LEADING UP TO THE END OF THE MIGHTY ROMANOVS IN 1917

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fabergé eggs

EACH EGG TOOK A YEAR OR MORE TO MAKE, INVOLVING A TEAM OF HIGHLY SKILLED CRAFTSMEN WORKING UNDER CONDITIONS OF UTMOST SECRECY

industrialist Alexander Kelch. Fabergé has even made it into the movies: in the 1983 James Bond movie Octopussy, a Fabergé egg is the object of a bidding war between James Bond and Kamal Khan.

Fabergé’s exquisite jewels and precious objects have stood the test of time. They still resonate today with poignant nostalgia and passion, their breathtaking craftsmanship and beauty deeply imbued with the spirit of their age, making them timeless treasures.

French in their artistic sensibilities but with a profound and poetic Russian soul, Fabergé’s works of art, like the stories they tell, continue to exert a powerful fascination, as hypnotic today as ever before.

WHAT HAPPENED TOFABERGÉ? should contain ‘a surprise’. As he dreamed up each complex concept, Fabergé drew on family ties, events in the life of the Imperial Court and the milestones and achievements of the Romanov dynasty.

Every year, Tsar Alexander III presented a new Imperial Egg to his wife. Following his death in 1894, the tradition was continued by his son Nicholas II, who presented an egg annually to both his wife, the Empress Alexandra Fedorovna, and to his mother.

There were no presentations in 1904 and 1905 because of political unrest and the Russo-Japanese War, and in 1917, the Russian Revolution brought a violent end not only to the Romanov dynasty but also to the House of Fabergé. The Bolsheviks seized the company’s workshops and their treasures, all production was closed down and Peter Carl Fabergé fled with his family to Switzerland, where he died in 1920. The Romanov palaces were ransacked and their treasures moved on Lenin’s orders to the Kremlin Armoury.

Where did the Imperial Eggs end up?

Of 65 known large Fabergé eggs, only 57 have survived to the present day. Ten of the Imperial Easter Eggs are still displayed at the Kremlin Armoury Museum in Moscow. Of the 50 known Imperial eggs, 42 have survived

while photographs exist of just two of the eight lost ones: the 1903 Royal Danish, and the 1909 Alexander III Commemorative eggs.

Only one, 1916’s Order of St. George egg, left Bolshevik Russia with its original recipient. The rest remained in St. Petersburg. In a bid to acquire more foreign currency, Stalin had many of the eggs sold in 1927, following an evaluation by Agathon Fabergé. Between 1930 and 1933, 14 Imperial Eggs left Russia.

Many were sold to Armand Hammer, President of Occidental Petroleum and a personal friend of Lenin, and Emanuel Snowman of the London antique dealers Wartski.

A collection of nine eggs and 180 other Fabergé objects belonging to American media magnate Malcolm Forbes was displayed in New York City and put up for auction at Sotheby’s by Forbes’ heirs in February 2004.

Before the auction began, the collection was purchased in its entirety by the oligarch Victor Vekselberg for a sum thought to be between $90 and $120 million.

Over the years, Fabergé has taken the inspiration of its Imperial Eggs and made some other large eggs for a few select private clients such as the Duchess of Marlborough, the Nobels, the Rothschilds and the Yusupovs. A series of seven eggs was made for the

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The Equestrian Fabergé egg Alexander III

F

ollowing the nationalisation of the House of Fabergé in 1917, the Fabergé trademark was sold several times and several companies have subsequently retailed egg-related merchandise using the Fabergé name. The

House of Fabergé became Russia’s largest jewellery firm employing some 500 craftsmen and designers and in the early 20th century, the headquarters of the House of Fabergé moved to a purpose-built, four-storey building in Bolshaia Morskaia.

Branches were also opened in Moscow, Odessa, Kiev and London.

In a legal settlement in 1951, the Fabergé family lost the right to produce and market designs under the Fabergé name. For many years, the name of Fabergé was associated with perfume and in 1989 the Unilever corporation bought Fabergé Inc., and registered the Fabergé name internationally as a trademark for a wide range of merchandise, granting licenses to third parties to make and sell a range of products ranging from jewellery to spectacles under the Fabergé name. Recognising Carl Peter Fabergé’s enormous prestige as a jeweller, Unilever appointed jewellery manufacturer Victor Mayer, as its exclusive Fabergé workmaster. From 1989 to 2009 Mayer produced licensed and certified authentic Fabergé fine jewellery and egg-objects. In January 2007, Unilever sold its entire global portfolio of trademarks, licences and associated rights relating to the Fabergé brand to the Cayman Islands-based Fabergé Limited, which still owns the trademark today. The principal investor is Pallinghurst Resources LLP, an investment advisory firm based in London. Fabergé Limited has stated that it intends to establish Fabergé as the world’s most exclusive luxury brand.

History came full circle in October 2007 when Fabergé, under new ownership and direction, announced the reunification of its name with the Fabergé family. Fabergé was re-launched in September 2009 and its first three jewellery collections were launched: Les Fleurs, Les Fables and Les Fauves de Fabergé. In December 2009 it opened a boutique in Geneva and in July 2011 the company launched two collections of egg pendants, the first to be made

by Fabergé since 1917.

The first collection (Les Fameux de Faberge) comprises twelve one-of-a-kind creations inspired by an old Russian proverb. The second consists of 60 fine jewelry egg pendants (Les Frissons de Fabergé) in an effort to rekindle the tradition of giving Fabergé gifts for special occasions.

THE MOST EXPENSIVE FABERGÉ EGGS

The 1913 Winter Egg

The Rothschild Egg

T

he most expensive Fabergé egg made was the 1913 Winter Egg, which was invoiced at 24,600 roubles – the equivalent of £2,460 at the time, which today would cost about £1.87 million. The Winter Egg, designed

by Alma Pihl, famed for her series of diamond snowflakes, was created from carved rock crystal as thin as glass. Embellished with engraving, and ornamented with platinum and diamonds to resemble frost, the egg rests on a rock-crystal base designed as a block of melting ice. Its ‘surprise’ is a magnificent platinum basket of exuberant wood anemones made from white quartz, nephrite, gold and demantoid garnets which emerge from moss made of green gold. It is 14.2cm in height and set with 3,246 diamonds. The egg sold at Christie’s in New York in 2002 for US$9.6 million.

In November 2007, a Fabergé egg-clock, described by Christie’s as the Rothschild Egg, sold at auction in London for £8.9 million.

The egg’s ‘surprise’ is that upon the hour, a diamond-set cockerel pops up from the top of the egg, flaps its wings and nods its head, crowing all the while. This lasts fifteen seconds, before the clock strikes the hour on a bell. One of the few eggs not made for the Russian Imperial family, it had been in the Rothschild family since 1905 and was one of the most expensive Fabergé eggs ever made and sold. The price achieved by the egg set three auction records: the most expensive timepiece, Russian object and Fabergé object ever sold at auction.

The Rothschild Egg was bought

by Alexander Ivanov, Director of the Russian National Museum, and was eventually put on display at Ivanov’s Faberge Museum in Baden-Baden, Germany.

BOOK REVIEW DAVID HOCKNEY: A BIGGER PICTURE

BY TIM BARRINGER AND EDITH DEVANEY (THAMES & HUDSON, 2012)

I

RRP: £60 (£39 FROM AMAZON.CO.UK)

f you have been fortunate to see the exhibition at the Royal Academy of Arts in London (it ends on 9 April before travelling to the Guggenheim Museum, Bilbao (14 May30 September, 2012) and the Museum Ludwig, Cologne (29 October, 2012-4 February, 2013), you will probably have bought this book which serves as the exhibition catalogue. While Hockney has always been closely associated with Pop Art and California, where he has lived for much of his life, this major study of his work redefines him as an important painter of the English countryside, presenting his recent landscapes for the first time. In an attempt to renew contemporary art, Hockney returned to painting in the open air, observing with honesty and intensity the scenery of his childhood in East Yorkshire. This sumptuous book contains several hundred colour reproductions of the artist’s work, mainly of the latest paintings though including others too. If you can’t see the exhibition, this is probably the next best option. Hockney is – astonishingly – back to his very best.

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Stepping over the Snake Learning is compulsory if you want

THE LAST WORD

to survive

By Peter Economides

S

tudying is tough, especially for your final exams. That’s why when I would drive, almost daily, twenty minutes out of Cape Town to watch the sunset on my favourite beach. It cleared the mind.

It was a day like any other. Barefoot and wearing shorts, I walked down to the beach. Disruption. There was a snake at my feet. A big, fat, ugly Puff Adder. They are lazy but as fast as lightning when they decide to strike. And highly venomous.

Understand this. I am terrified of snakes.

Adrenaline put my mind into overdrive. In a nanosecond that felt like hours, I analyzed my options. Following my natural instinct and stepping back in horror was not an option. The snake would be likely to strike. Fighting the snake was dangerous. I could lose. And then it dawned on me that he wished I was not there as much as I wished he was not there. I lifted my foot, stepped over the snake and carried on walking. Twelve steps later I broke into a cold sweat. I almost screamed a silent scream.

Danger is the strongest stimulus because survival is the strongest instinct. And that’s why, when faced with danger, we tap into unknown resources to become everything we are. Because we need to in order to survive. Disruption brings out the best in us. And we learn.

We live in a world of change and crisis.

A world of disruption. A world in which

the lives of the companies we run, and sometimes our own lives, are in danger.

We live in a time when learning is not compulsory... but neither is survival.

Ask the record companies.

When music migrated from vinyl to CD it went digital. And as the Internet grew, so did the number of music downloads.

Because people don’t consume records, they consume music. The record companies fought this snake with lawyers and they lost. And iTunes, Apple’s online music store, became one of the world’s largest music retailers.

Ask Kodak.

When photographs went digital, Kodak

You may be a fast learner but what about your company?

did not. And today the image business is dominated by Sony and Panasonic and Nikon and Canon. Ask Polaroid too.

And there is a bigger, more venomous snake out there.

And it is disrupting every company including your own.

It is called “tomorrow.”

Technology is changing at exponential rates.

What you learnt yesterday you need to unlearn today as you relearn tomorrow.

That is just the way it is. And you had better get used to it.

You may be a fast learner but what about your company?

Today’s organisations need to be learning organisations.

Organisations that seek out change and embrace it ahead of their competitors.

Organisations that step over the snake rather than fight it or step back in fear.

Organisations that are open, intelligent, agile and flexible.

Take a close look at some of the world’s leading corporations. The ones that show sustained growth in the face of disruptive change. You will find some strange job titles there: “Chief Learning Officer” and “Chief Listening Officer”. You will also find some strange departments: “Department of the Future”.

Maybe one day schools and universities will teach the art of learning.

Because learning is compulsory, if you want to survive.

info: Peter Economides is a Brand Strategist and founder of Felix BNI. He is a former Executive Vice President and Worldwide Director of Client Services at global advertising agencies McCann-Erickson Worldwide and TBWA\Worldwide. He has worked on some of the world’s most iconic brands including Coca-Cola, Apple, Absolut, illy, Audi and Nike. In Cyprus, he has been involved in branding projects for Bank of Cyprus, Sigma Television and easy-forex. Peter is based in Athens.

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