Since 1974, political stability in Cyprus has been tarnished by continued struggles between Turkish and Greek interests. In turn, its progression as a financial centre has been halted by the perception of it as a tax haven for money of questionable origin. But in the past few years, Cyprus has had good reason to celebrate a marked departure from these images, particularly with its accession to the EU due in May.
"For our accession to the EU, we had to amend our legislation in many areas and abide to stricter regulations," says Haris Hambakis, manager of private banking at Laiki Bank. "Despite the September 11 shock and the changes that came with it, which affected the financial world, we managed to sustain our growth through a rigorous promotion of our services."
Louis Pochanis, private-banking manager at Bank of Cyprus, says that Cyprus cannot be considered an offshore centre now because it has to comply with EU directives.
"Previously the tax rate for offshore companies was 4.25%, while now with the new tax legislation, it is 10% for all companies, so there is no tax discrimination any more," Pochanis says.
Respondents to Euromoney's survey of private banks published last month ranked Bank of Cyprus as the island's top private bank, followed by Alpha Finance and Cyprus Popular Bank.