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Country Commercial Guides FY 2000: Cyprus Report prepared by U.S. Embassy Nicosia, released July 1999 Note*

VIII. TRADE AND PROJECT FINANCING

Banking System

The standard of banking services in Cyprus compares well with European countries and the United States. The Central Bank of Cyprus supervises closely private banks and requires them to meet Bank for International Settlements (BIS) standards as well as corresponding directives by the European Union. Bank financial statements are in compliance with international standards and audited by internationally-recognized auditors. The new Banking Law of 1997 provided for a properly-funded deposit insurance scheme. However, the specific provisions and regulations for this scheme are still pending before the House of Representatives (they are expected to pass in the Fall of 1999).

Currently, there are six active domestic banks in Cyprus offering all types of services, including deposit accounts, lending advances, leasing, credit card facilities, automatic banking machines, etc., while some of them have subsidiaries dealing with insurance services, investment banking, and other related services. All domestic banks have correspondent arrangements with U.S. banks. Cyprus banks have received very high ratings from international rating agencies.

Foreign Exchange Controls Affecting Trading

Current regulations for exchange control do not affect or hinder international trade. The Central Bank actively encourages cross border financing activity and grants permission freely to businessmen to meet their international obligations. In general, there is no problem with credit availability, although the capital market will obviously benefit when the legislative ceiling on interest rates, and foreign exchange controls for residents are finally lifted.

General Financing Availability/
Types of Available Export Financing and Insurance

Cypriot businesses generally have to rely on local sources of financing. However, the Central Bank has already started liberalizing the financial system and will proceed with full liberalization in the near future, allowing locals to borrow from abroad as well.

Companies with foreign participation are required to borrow from external sources in proportion to the non-resident participation in their capital. This requirement is waived if the non-resident participation is less than 24.0 percent of the share capital.

Cyprus enjoys an excellent credit rating internationally (Standard and Poor's rates Cyprus' long-term credit AA- and it's short-term credit A1+). Banks in Cyprus employ all modern methods of cross-border financing, including letters of credit, bills for collection, documentary credit, cash against documents, etc. U.S. Eximbank financing could also be applied in Cyprus for U.S. source equipment purchases. Eximbank is open for short- and long-term trade financing. Cyprus graduated from World Bank borrowing in 1992.

List of Banks with Correspondent
U.S. Banking Arrangements

The following banks offer correspondent U.S. banking arrangements in Cyprus:

-- Alpha Bank, tel: 357-2-888888, fax: 357-2-773766;

-- Arab Bank, tel: 357-2-767111, fax: 357-2-760890;

-- Bank of Cyprus, tel: 357-2-37800, fax: 357-2-378327;

-- Cyprus Popular Bank, tel: 357-2-450000, fax: 357-2-449831;

-- Hellenic Bank, tel: 357-2-360000, fax: 357-2-454074; and

-- National Bank of Greece, tel: 357-2-441412, fax: 357-2-369349.