Crisis is an overused term, worn out by endless repetition. For most European economies, it has meant a period of low or stagnant growth over the last decade and, in some cases, a year or two of negative GDP eventually followed by a welcome recovery. For Cyprus, however, the word has had even greater potency: between 2008 and 2015, GDP per capita declined by roughly 30%. On top of the global 2008-09 recession, Cyprus had its own domestic banking crisis in 2012-13, precipitated by the eurozone collapse. This led to a downgrade of its bond credit rating to junk status and a €10bn bailout programme from the troika of the European Commission, the European Central Bank and the International Monetary Fund.
It would be all too easy to dismiss Cyprus based on this performance – except that the island’s economy is experiencing a belated rebound. And what that means for investors in the medium term is significant. Despite financial services activity continuing to have a negative effect on the economy, latest GDP figures show a healthy 3% growth, which ‘surpasses all expectations’, according to finance minister Harris Georgiades. Continue reading “A new hope for Cyprus’s recession-battered lawyers”
On the face of it, Cyprus has much to celebrate. In March, the country completed the three-year economic adjustment programme that followed 2013’s €10bn bailout package agreed with the European Commission, European Central Bank and the International Monetary Fund. That the country has finally wrested back control of its finances was coupled with the Commission’s prediction of a 1.4% rise in GDP for Cyprus in 2015 – the first year of economic growth since 2011.
This good news provides a psychological boost following years of financial turmoil, but even the most ardent optimist would concede that Cyprus has a long way to go. The island is mired in debt and faces a lengthy period of post-programme surveillance (PPS) by the Commission, which will continue until it has paid at least 75% of the €7.25bn in loans it received from the bailout. The Commission estimates that, ‘barring any early repayments’, the PPS will continue till at least 2029. Alongside this are the €26.7bn of non-performing loans (NPLs) that the country’s banks must deal with. According to the World Bank, in 2015 these NPLs accounted for 44.8% of the country’s total gross loans, a figure much higher than Greece’s 34.4%. These factors will define Cyprus’s economic future for many years to come, both on a macro and micro level. Fundamental to this is how Cyprus positions itself in the global economy, particularly now that one of its key investment partners, Russia, can no longer be relied upon to generate previous levels of work. Continue reading “Cyprus: Picking up the pieces”
Wind back 12 months and the mood from the Cypriot legal community was undeniably improving. The island was meeting the terms of its €10bn bailout from Europe, following near economic collapse in 2013; the discovery of gas reserves offshore looked particularly favourable; and even the Turkish and Cypriot halves of the country had begun reviving stalled peace talks with the aim of once and for all reuniting the island.
Once again, though less happily this time, what a difference a year makes. Twenty four months on from the EU-imposed haircut, a feeling of pessimism has returned to Cyprus – certainly among its legal elite.
Continue reading “Return of the black dog – Hard times return for Cyprus’ legal community”
A year ago Cyprus was heading for disaster. The banking crisis had hit hard and predictions of where it would leave the country ranged from the sublime to the ridiculous. Hyperbolic headlines screamed that Cyprus would be forced to quit the eurozone and that everybody would be out of a job. Foreign investors would leave in droves, said the naysayers, so the island had better just go back to fishing and tourism as its mainstay.
Thankfully for the majority, and certainly for the Cyprus legal community, such prophecies have proved overdone. Depending on who you speak to there is really only a mix of cautious or, for some, more courageous optimism about where the Cypriot economy is headed and the benefits that will be realised in the next couple of years by its advisers.
Continue reading “Making bail – getting Cyprus back on its feet”
Beware the Ides of March: for two weeks earlier this year, the world held its collective breath as Cyprus teetered on the brink. What began with Cypriot banks closing their doors to prevent a run ended with recently installed president Nicos Anastasiades signing a bailout deal with the Troika that he hopes will save the country from bankruptcy.
Anastasiades walked into the crisis with his eyes open. Cyprus, which has been in dire straits following successive ratings downgrades last year, sought financial aid and support in June, and entered negotiations with the International Monetary Fund (IMF), the European Commission and the European Central Bank. However, Cyprus was unlikely to face the embarrassment of bankruptcy negotiations until its six-month tenure of the EU presidency ended last December. Inertia prevailed until the new government was elected in February, tasked with saving the nation’s economy. Not since the violent partition of the island in the mid-1970s has the country so dominated world headlines. Continue reading “Keep Calm and Carry On – Cyprus’ lawyers face up to the worst”
Last year Cyprus’ legal market appeared enviously impervious to the financial crisis. Twelve months later and the Mediterranean financial hub has been hit hard by heavy exposure to the Greek debt crisis and its successive write downs.
In scenes that have been played out repeatedly across Europe – and which are deeply reminiscent of the early stages of the banking collapse in low corporate tax rival Ireland – the island’s sovereign rating has been downgraded to junk status, amid fears that the Cypriot government will be forced to prop up its toxic debt-laden banks, curtailing its access to the international debt markets. Continue reading “Cyprus – Problem Plays”
Improved relations with Russia and accession to the European Union are helping to transform Cyprus as a financial hub. LB looks at the impact on the local legal community.
Cyprus is fast approaching a tipping point in its international development. It may be an island of less than one million people, with a total of 2,000 lawyers, but its strengthening trade ties with Russia and the emerging markets, not to mention its accession to the European Union and some shrewd domestic legislative developments, have helped the country grow its profile in the international financial arena.
Continue reading “Cyprus – Notes From A Small Island”