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In order to implement the Eurogroup agreement on the restructuring of the Cypriot banking system, Parliament recently enacted a new law on the resolution of credit institutions. The law aims to pave the way for the speedy reconstruction and rehabilitation of credit institutions under resolution and the concentration of powers to a resolution authority, among other things.
Under the Banking Law, all persons with access to the records of a bank are prohibited from giving out, divulging, revealing or using for their own benefit any information regarding the account of any individual customer of the bank, unless certain exceptions apply. The rules aim to enhance the trustworthiness of banks and credit institutions and encourage them to impose internal structures in order to ensure compliance.
As a well-established financial services centre and a member of the European Union, Cyprus is one of the best environments in Europe for the provision of banking services. A credit institution which is authorised and supervised by the competent authorities of another EU member state may conduct banking activities in Cyprus either by establishing a branch or by way of provision of services.
A bank is a corporate body licensed to carry out banking business under the Banking Law. A banking business licence is granted only to legal persons established in Cyprus, pursuant to the Companies Law or any other law, or to legal persons established in another country, pursuant to the corresponding legislation of that country. Businesses applying for a banking business licence must fulfil a number of requirements.
The crisis in the Eurozone banking sector, following hot on the heels of the global financial crisis, has impacted on the financial stability of those Cypriot banks that were heavily exposed to Greek government bonds. Guidelines are in place that aim to provide a standard procedure of acquiring control in a Cypriot bank by investors and safeguards to the banking sector by simplifying such procedure.
Group companies with a presence in Cyprus can breathe a sigh of relief in light of a new amendment to the Criminal Code on interest rate ceilings. The applicability of the interest rate ceiling introduced earlier this year to intergroup structures was previously uncertain in terms of scope. However, the amendment has now clarified the arrangements to which the interest rate ceiling provisions do not apply.
According to a new regulation, foreign exchange trading transactions now fall within the ambit of the Law on Provision of Investment Services. In practice, the regulation means that the reception, transmission and execution of orders relating to certain financial instruments are considered to be an investment service which can be provided only by an authorized Cypriot investment firm.