At 9:30pm Cyprus time, media there were reporting that the country’s parliament had voted down the plan to solve Cyprus’s debt problems by taking a percentage of every account held in the country’s banks. The margin of the vote was not immediately clear, however, with the BBC reporting that “no MPs voted for the bill” and 19 abstained, while other media said the vote had been closer.
The levy on all bank accounts had been proposed over the weekend as part of a €10bn (£8.7bn,$13bn) EU/IMF bailout package.
As news of the parliamentary vote became known, the demonstrators’ anger was replaced with relief, according to reports and eyewitnesses.
Cyprus’s deep financial problems, which the bailout scheme had been designed to solve, however, remain.
Tony Pentland, head of business development at 3D Global Financial Services, which is based in Limassol and which caters for expatriates, said Britons living in Cyprus were “obviously very concerned” about events there. Many seemed to be drawing on the time-honoured British tradition of “rallying round each other” in a crisis, he added.
“It would appear that the situation here is very tense,” Pentland said, noting that it now looks as though the banks, which were closed on Monday and today, will remain shuttered until next Tuesday, as next Monday is — on top of all the turmoil — a bank holiday.
Pentland reassured those expatriates who were worried about their investments “not to be unduly worried” if they were currently invested into diversified portfolios offshore.
“However, accessing cash from Cypriot banks will be difficult in the coming weeks and months,” he noted.
Another significant proportion of British expatriates in Cyprus are military service personnel. Pentland noted that they have been given assurance by the UK Government that “any ‘reasonable claims’ will be met” which were incurred as a result of the banking crisis.
Role for int’l banks
Justin Harris, managing director at Zurich-based Chase Belgrave wealth management, which has expat clients in Cyprus as well as other markets, said some British banks with international operations could take on new clients as a result of the turmoil in Cyprus.
Among them, he said, would be "those with names that are recognisable from the British high street, like HSBC Expat, Lloyds TSB International and Barclays International", which, he noted, benefit from offering sterling accounts within the British banking system, but which also are equipped to handle cross-border tax situations typical of expatriates.
There could be some benefit to those banks with Isle of Man and Channel Islands operations, since these "are not part of the EU so can never be under pressure to freeze or windfall-tax bank accounts" the way that Cyprus was, Harris pointed out. But in the wake of such other high-profile banking failures as the Icelandic banks and Northern Rock, "more and more expatriates are realising that cash in high interest bank accounts probably isn’t the best or safest way to get a retirement income".
