Once only wealthy Russians applied to deposits in foreign banks, who wanted to hide their funds from taxes or save them from various economic risks inherent in Russia.
Today, due to a certain instability in the banking sector, opening a deposit in a foreign bank abroad is a practical solution for anyone with a capital of 50 thousand dollars or more.
In addition, many of our fellow citizens now have business relations with foreign companies, acquire property abroad or pay for the education of children, and therefore it will also be very convenient for them to keep part of their savings on an account in a foreign bank.
Deposits in foreign banks have a number of advantages and disadvantages in comparison with domestic organizations. The benefits include:
- maximum level of reliability. Swiss banks are especially famous for this;
- in the event of bankruptcy, the depositor is reimbursed for the entire amount of the deposit, while in Russia, only part of the deposit can be expected to be reimbursed.
But there are also negative aspects:
- expensive service;
- high threshold for the minimum deposit amount. In most cases, it starts at $ 15,000;
- low interest rates, unlike Russian banks;
- an extensive list of documents that will need to be provided. The reason for this is the strict control of the depositor by the tax office;
- the registration procedure takes quite a long time. On average, from one week to several months;
- the need for personal presence during the conclusion of the agreement, which will lead to additional expenses for traveling abroad.
Do not forget that in every developed European state there are measures that prevent the legalization of funds obtained in a criminal way.
Therefore, any potential investor is thoroughly checked for reliability.
Another feature is the indexed contribution, which is now widespread in the West. It is a symbiosis of the classic deposit and alternative investment methods, such as buying precious metals or securities.
Investing in this way, you can not be afraid of losing your money, and with successful changes in the market, you can even raise interest rates.
Ways to open a deposit in foreign banks
First of all, the prospective client is subjected to a thorough and comprehensive check, especially the legality of his income. If the legality of the funds is not in doubt, then the bank offers to conclude an agreement on opening an account.
To do this, a foreign company will require not only the usual passport and application, but also a number of other documents. Typically, they include:
- a notarized copy of the passport, including the spouse or spouse;
- certificate of family composition. It contains information about family members registered in the same residential area, indicating their place of residence;
- a receipt for payment of utilities received in the name of the depositor. This is necessary to confirm the place of residence indicated in the application;
- a certificate confirming the indicated amount of income for the last few years with the seal of the tax service;
- a certificate certifying the absence of a criminal record;
- other securities depending on the bank's decision.
After the necessary documents are prepared, you can proceed to the conclusion of the contract. In this situation, there are several options for action.
First of all, do business on your own. A potential depositor sends a package of documents by mail or fax, and after being notified of a positive answer, he personally visits the bank's office in another country, signing an agreement.
Secondly, cooperation with a financial institution through its representative offices in Russia. Such a branch will help prepare a list of required documents, which will later be sent to the main branch. But, as in the first case, for the final conclusion of the contract, you will have to go abroad.
Thirdly, contact a company that provides intermediary services. Today there are a huge number of companies that open bank accounts abroad. The place where the agreement is signed may depend on the specifics of the agreements between such an organization and the bank.
It is important to remember that after the conclusion of the contract, the client must notify the tax office within the next month about opening an account. If this is not done, he may face a fine of up to five thousand rubles and a ban on transferring funds to a foreign account.
You can replenish a foreign account in any of the possible ways, but it is more convenient to do it by bank transfer.
Interest rates
According to experts, the main reason for opening a foreign deposit is precisely to save capital, and not to increase it. After all, rates in foreign banks are significantly lower than the interest on deposits offered by domestic companies.
In particular, the highest rates in such Russian financial institutions as Uralsib or Trust reach 9 percent, while foreign ones can boast only 3-4 percent on average. The most favorable conditions for opening deposits are provided by banks in the following countries:
- The first place is undoubtedly taken by the financial companies of Cyprus. Banks such as Bank of Cyprus, National Bank of Greece, The Cyprus Development Bank and Housing Finance Corporation have a deposit rate of 4-5 percent per year. Some offers reach 7 percent per annum.
- The banks of Latvia are on the second line in terms of profitability. For example, Aizkraukles, Baltikums Bank or Citadele offer 2 to 3 percent per year. Accounts can be opened not only in dollars, but also in euros.
- Next comes the United States of America, represented by Citibank, JPMorgan Chase Bank and HSBC Free Union, which provide 2.95 percent per annum on deposits in their branches.
- Standard Chartered PLC, based in England, is ready to open an account in pounds sterling at 2.7 percent per annum.
- Italian Intesa Sanpaolo makes it possible to place a deposit at 1.5 percent in euros.
- Also, banks of such European countries as Switzerland, France, Belgium, Germany and some others have quite favorable conditions. The rates there vary from 1 to 1.3 percent per annum.
In addition, in the west there is a practice when banks assign a much lower percentage to residents than to citizens of their state. Therefore, before making an investment, you should carefully read the specifics of opening a deposit in a particular financial institution.
Conclusion
So, deposits abroad are an excellent option for saving your funds during this difficult, from the point of view of the economic situation, time. They will allow you to save, and in some cases increase your money savings.
For those who have a business, real estate or carry out other financial transactions abroad, a bank account becomes a real necessity. However, despite these advantages, the choice of a bank should be approached with full responsibility, relying on your desires and capabilities.
The banking system is the leading sector of the Cyprus economy. Today, there are about thirty national and foreign financial enterprises operating in the country. According to various estimates, their accounts hold about seventy billion euros. Many credit institutions have a well-developed branch network. Their offices operate in the UK and other European countries.
Advantages of the Cyprus banking system
Investors and clients of the island's financial structures highlight a number of undeniable advantages of cooperation:
- no requirement for a minimum minimum balance;
- low amounts of initial contributions;
- negligible number of refusals;
- efficiency of account registration;
- reliability.
List of credit institutions
The list of the largest banks carrying out commercial activities in the country includes the following companies:
- Cyprus Development Bank.
- Gellenic Bank.
- Housing Finance.
- RSB Bank.
- Central Cooperative.
- Alfa Bank Cyprus.
- "SBA Bank".
- Eurobank Cyprus.
- National Bank of Greece.
- Arab Jordan Investment.
- "Credit Libanais".
- "PromsvyazBank".
- Lebanon and Gulf Bank.
- Byblos Bank Sal.
- Saxo Bank.
- BankMed.
- Fest Investment Bank.
- Bank of Beirut.
- "BBAC SAL".
- Bemo Sal.
- Open Joint Stock Company.
Financial market leaders
- Bank of Cyprus.
- Hellenic Bank.
- Marfin Laiki Bank.
Bank of Cyprus
This credit institution is considered to be the most demanded and largest financial enterprise on the island. Its services are used not only by local residents, but also by foreign citizens.
He is regularly included in the list of the most influential banking structures in the world. The credit institution owes its popularity to the developed network of ATMs and branches. Bank of Cyprus is loyal to its potential depositors.
It offers registration of term deposits. It is engaged in the issuance of personalized debit and credit plastic cards connected to the international payment systems Visa and MasterCard. Almost anyone can open an account in this institution. There are no veiled requirements and so-called pitfalls. Everything is simple and transparent.
Bank of Cyprus is recognized as the most attractive bank in Cyprus. Its client base includes citizens of Russia, Ukraine, Kazakhstan and the states of the European Union. Individuals and legal entities can open a deposit. You do not need to visit the office personally for this. All manipulations are performed remotely.
Hellenic Bank
It owes its popularity against the background of other banks in Cyprus to the minimum requirements for depositors and loyalty to all categories of clients. Its share of the island's financial market is sixteen percent. The company was founded in 1976.
It currently has 70 branches on the island and 20 international offices. More than two thousand specialists work in its staff. Like other reputable banks in Cyprus, it has a branch in Moscow and also in St. Petersburg.
The company entered the Russian market in 2011. The economic policy of the institution allows opening a deposit without the personal presence of the client. The company serves legal entities and individuals. The employees speak Russian and English.
Information for opening a deposit in a bank of Cyprus Hellenic Bank:
- copy of the civil passport of the Russian Federation;
- an extract from a third-party bank from a personal account;
- completed customer questionnaire;
- mailing address.
For representatives of legal entities, it is required to present a set of statutory documents of a company registered on the island. Plus it is necessary to fill in additional forms of the client's questionnaire.
Advantages of Gellenic Bank:
- availability of Russian-speaking staff;
- lack of paperwork;
- the ability to open an account in Russian rubles;
- the promptness of the transfer of funds;
- remote control;
- zero irreducible balance.
Among the shortcomings, one can single out a relatively small number of branches, expensive tariffs for carrying out payment transactions, violation of the terms for crediting transfers.
Marfin laiki bank
The lending institution was founded as a result of the merger of two influential banks in Cyprus at once. It is the legal successor of Marfin Popular Bank Group, Laiki and Ignatia. Marfin Laiki Bank has offices in eleven countries. Branches operate in the Russian Federation, Estonia and Ukraine.
The clients of the institution are individuals and legal entities. Personal presence is not required. As in other banks in Cyprus, accounts at Marfin Likes are opened remotely. The package of documents required for registration of the contribution of a legal entity:
- the charter of a company registered on the island;
- copy of the civil passport of the Russian Federation (all pages);
- bank statement of a third-party credit institution;
- completed form;
- valid mailing address.
In case of disputable situations, the bank does not show initiative. Clients have to call on their own and find out the fate of their payment. Delays in crediting funds to the personal accounts of depositors are a frequent occurrence.
Eurobank Cyprus
This financial company is included in the list of banks in Cyprus providing services to foreign citizens. It is a subsidiary of Europa Bank. The structure's portfolio includes a wide range of services for individuals and legal entities. Foundation date - 1990. Offices are located in Great Britain, Luxembourg, Serbia, Romania, Russia, Ukraine, Bulgaria.
The calling card is delicate and attentive service to all categories of clients. Not all banks in Cyprus offer such a high-quality service. Some of the island's financial structures are focused exclusively on large investors. The head office of the institution is located in the capital. Personal accounts are opened remotely, without the personal presence of potential customers.
The package of documents required to start cooperation is standard. The services of intermediaries for signing the contract in absentia will cost 60,000 rubles. This amount includes all costs associated with opening a deposit.
Russian banks in Cyprus
Large domestic credit companies have their offices on the island. These include Russian Commercial Bank, PromsvyazBank in Cyprus, Alfa Bank.
"Russian Commercial Bank"
The company is associated with the financial structure of VTB, the leading credit system in Russia. According to experts, Russian Commercial Bank is considered the largest domestic financial corporation that provides its services in European countries. He holds a full-scale license that allows him to carry out all types of payment transactions and monetary transactions in Cyprus.
"PromsvyazBank"
The institution has not only a Cypriot representative office, but also offices in India, China and the countries of the former CIS. Regularly ranked among the ten largest financial institutions in the Russian Federation. On the territory of Cyprus, it offers a wide range of services designed for businesses and individuals.
Spring 2013 will remain in economic history as the Cyprus Crisis, which surprised the world with new methods of global politics. This time, the crisis in the banking sector of the small island also affected Russian investors.
Chronicle of the crisis
The background began long before the March events. Cypriots say that some dedicated Russians began to withdraw their capital from the island at the end of last year, when it became clear that Cyprus had big problems with the return of debts from external borrowers, in particular on government bonds of the Greek government. They tell the story of a prudent Russian pensioner who every Friday withdrew her small savings from her bank account, returning them back on Monday. She did not hide the fact that her son, who works as an economist in Russia, suggested this to her. A caring relative warned of impending troubles, which usually begin on the weekend. The woman saved her savings on March 15, unlike many other depositors.
Not only deposits, but also the current accounts of citizens, which the European Central Bank initially proposed to sequester by 10-20% in favor of saving the Cypriot economy, were under attack. As for Russian money, in addition to private deposits, legal entities, including corporations with the capital of the Russian state, hold settlement accounts on the island. Structural divisions of several of our banks are also located offshore.
As a result, on March 29, the Cypriot Government, at the suggestion of the European Commission, decided to restructure debts only in the two most problematic (and at the same time, the largest) Cypriot banks. Cyprus Popular Bank (operating under the Laiki brand) was declared bankrupt, its clients lost all funds, except for the insurance amount of 100 thousand euros. Bank of Cyprus depositors hope to unfreeze at least 40% of their money in six months. In other banks, deposits are not touched, but transfers from accounts there are still strictly limited and controlled by local authorities. The issue of doubling (up to 30%) tax on income from deposits has been practically resolved.
Global changes after Cyprus
Although the Cyprus crisis is still far from complete resolution, experts are already drawing certain conclusions. For example, Valentin Katasonov, professor of the Department of International Monetary and Credit Relations of MGIMO, Doctor of Economics, claims that the history of the sale of foreign exchange reserves on a global scale began in Cyprus, which may affect our state in the future. The scenario proposed by the real creditors of the world economy (the European Union, the European Central Bank and the IMF, behind which are the banks of the City of London and Wall Street) is as follows.
First, the country selected as a victim is offered an unacceptable plan in advance, which is changed to a softer version after the shock effect is achieved. As a result, the state "sitting on a credit needle" is forced to agree to any conditions that previously seemed incredible. Today we are witnessing how, step by step, the Cypriot state is losing its national sovereignty. The process is more like economic suicide. If at the end of March the government agreed with the European Union on a 17 billion dollar recovery program (and in fact, a long debt yoke), today another amount of 23 billion is already announced, which is divided into two parts: a loan from European financial conglomerates and internal sources.
The latter, in addition to restructuring and privatization, includes the sale of internal gold reserves that had previously been accumulated. The precious metal has already begun to rapidly decline in price on world markets. And here it is important that the proceeds from the sale go to cover the state debt to international creditors. Today, state corporations of our country are also among their debtors. The forced sale of state gold at a reduced price is what we need to fear during the second wave of the crisis in Russia, according to Professor Katasonov.
Another major economic expert, a Swiss banker who founded his own investment company in Hong Kong, Mark Faber predicts that what happened to Cypriot investors will soon happen everywhere, including in the United States. Ordinary Americans and other residents of countries with Western democracies will have to lose up to 40% of their capital in a familiar way - through the loss of funds from accounts, higher taxes, deliberate bankruptcy of banks and other variations similar to those in Cyprus. This will be a payback for the fact that for a long time citizens voted for the pre-election promises of politicians in exchange for an increase in prosperity. Perhaps Faber was joking this time, suggesting that people "earn their living by their own labor" in order to avoid losses, but recall that the Swiss economist is famous for his unerring forecasts.
Inconclusive but impressive results of the crisis
However, let us return to the forecast of the consequences for the depositors of Cypriot banks, which are less global, but very indicative. In total, 56% of the deposits held in deposit accounts of all Cypriot financial institutions exceed the amount of 100 thousand euros, insured by the state. Some individuals cannot avoid bankruptcy. For example, it is argued that some of the depositors will be able to receive their funds only by September. The Russian capital of our citizens there is estimated at 14-18 billion euros out of 68 billion of all deposits. No one undertakes to accurately assess the account balances of legal entities with Russian beneficiaries registered offshore. According to rough estimates, this is from 15 to 60 billion euros in bank accounts or in local investment projects.
Bank of Cyprus holds nearly 23% of uninsured money. It is assumed that, on average, each of the depositors can lose up to 60% of their funds in this bank. Frozen (until about September) until 40% of account balances remain, on which interest is still accrued. There are even promises to add an additional 0.1% to them.
Clients of another Laiki Bank lose all funds in excess of 100 thousand euros. By the way, British citizens who have accounts in the same bank have the opportunity to return all their savings, subject to a special agreement between the authorities of the two states.
The movements of accounts in other banks are monitored by the Cypriot Government, which limits the rate of money transfers, however, regularly increasing the limits. So, today citizens can transfer up to 10 thousand euros within the country, abroad - up to 5 thousand per month. Corporations are allowed cross-border payments of up to 300 thousand per day, however, you must first prove their urgent need, which not everyone succeeds.
On April 26, the Ministry of Finance of the island lifted all restrictions on transfers of non-residents - clients of foreign banks. Many of our compatriots are trying to transfer their accounts from other banks to a subsidiary of VTB, which, according to rumors, received special benefits after the negotiations of the new Minister of Finance of Cyprus in Moscow.
There are proposals from economists to reduce the number of all banks (regardless of country of origin) in Cyprus by more than half. Today, most of the financial institutions here are foreigners: foreign branches or subsidiary legal entities. From Russian branches - Avtovazbank, PrivatBank, PromSvyazBank. There are local subsidiaries, for example, Russian Commercial Bank with 100% VTB capital.
According to experts, foreign deposits in the country account for about a third. If we talk about the volume of Russian participation in the monetary system of Cyprus, no one gives exact figures for obvious reasons. PrivatBank's managers claim that their branch's own assets accounted for slightly less than 1% in the island's banking system, but do not disclose the amount of funds raised by their clients in Cyprus.
By the way, the Russian Government offered its assistance to Cyprus, including on the basis of the exchange of information on the deposits of our citizens. According to rough estimates, the total losses of Russians (both individuals and legal entities) will reach 2-4 billion euros. All experts agree that this figure will actually be higher.
Alternatives to Cypriot deposits
Scenarios for further investments are being proposed very carefully today as an alternative to the Cypriot system. Our prime minister, for example, even thanked his colleagues from the European Union for the coup d'état. For Mr. Medvedev, the Cyprus crisis is good proof that the private capital of Russian citizens should be kept at home, working for its economy. The premiere is supported by the future chairman of the Central Bank, Ms. Nabiullina. With such statements, the views of government officials on private property under capitalism are incomprehensible. All the more incomprehensible is the position of the government, which allows the offshore presence of large state corporations, such as Itera, AvtoVAZ, Sovcomflot, which kept accounts in the bankrupt Laiki Bank. Are state-owned companies also optimizing offshore taxation?
The representative of the Cyprus branch of Promsvyazbank is optimistic that the offshore infrastructure on the island is being restored, and that the system will still be in demand. He estimates the losses of our banks at “a few million”. Today, Cypriot banks are inviting new customers with an increased 10% profit. However, already now many local investors are changing the foreign jurisdiction of their capital. New addresses are tied to the size of business and private savings. The risks of depositors, which directly depend on the purposes of foreign deposits, are exposed to a more balanced assessment. Someone diversifies their savings, others find it convenient to carry out export-import settlements through offshore companies.
The costs of opening and maintaining accounts will be inversely proportional to the deposit interest. Large capitals are moving to more expensive offshore zones in Switzerland and Luxembourg, where deposit rates are several times lower than domestic ones. There are cheaper options - Baltic banks, where the savings rate is close to the Russian one, but the business reputation of the banking system is questionable. Many businessmen rushed to open accounts in Malta and Southeast Asian countries (for example, Hong Kong and Singapore).
However, given the current situation, today unpredictable risks can arise anywhere. Irish, Spanish, Icelandic and Slovenian banks have been experiencing noticeable difficulties for a long time. There are many financially oriented zones in the eurozone, each with its own problems. For example, in Ireland, the banking sector exceeds GDP by 8 times, just like it was in Cyprus. This figure is slightly less in Malta. But in Luxembourg it is already 24 times. Before the Cyprus crisis, such indicators were not considered dubious, on the contrary, they spoke of investment attractiveness.
There are several dozen offshore states in the world, welcoming depositors with open arms. But their reputation is being questioned by international organizations to combat money laundering, which draw up their own "black" and "gray" lists. The lists even include the overseas territories of Great Britain (Anguilla, Bermuda, British Virgin Islands, Gibraltar) and such small states as Andorra, Liechtenstein, Monaco, Marshall Islands, etc.
Economists in many countries draw the attention of their compatriots that those people who went to offshore Cyprus for tax cuts ended up running into sequestration of deposits. A vivid precedent has been created for how high politics can be used to take away the money of citizens of another state.
Recently, the demand for placing deposits in foreign banks has been growing more and more. their percentage has nothing to do with the Russian economy, and therefore so attracts Russian citizens.
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By keeping money in different banks, the owner thus reduces the risks of his investments. Such a strategy is quite reasonable, because the chance that cataclysms will occur in several states at once is negligible.
Basic information
A deposit is the process of transferring the depositor's funds to the bank at interest with their return after a specified time or at the request of the client.
By investing your savings in the bank, you start to make a profit from them. Banks are fighting every day to attract as many customers as possible.
Investors are especially valuable clients, as their capital is used to replenish bank reserves and use in their commercial activities.
One of the main industry is, which requires a constant inflow of capital, which banks issue at interest to the population and organizations.
In this regard, it is profitable to open deposits, making a profit in the form of interest payments on the amount while your money is working somewhere.
When banks run out of reserves, offers with favorable interest rates on deposits sprout like mushrooms after a rain.
What period should be chosen for registration of such a service depends not only on this factor, but also on seasonal fluctuations.
For example, in the summer, people tend to spend money going on vacation. Accordingly, they withdraw part or all of the savings from the account, and banks again take into account this trend and are obliged to raise rates to attract new depositors.
Foreign deposits are more convenient for those who carry out activities abroad, as well as for ordinary citizens who have sent their children to study abroad.
Concepts
Despite the general knowledge, there are always people who do not understand the basics, and what kind of contribution would be beneficial and convenient specifically for them.
To do this, you need to understand the concepts and types of deposits that both our and foreign banks can offer.
It should be said right away that Russian banks give a much higher percentage on deposits offered than foreign ones.
But if you just want to protect your honestly earned money, and are worried about the reliability of our banks, it would be a wise decision for you to try to open an account abroad.
And in this case, be prepared to pay hefty for account opening, maintenance and other transactions.
Also, for non-residents, the percentage is most often offered even less than for their own, and the minimum down payment will be about $ 50 thousand and higher.
As an option, you can consider our banks that have branches abroad, but many citizens are also distrustful of them as well as ordinary Russian ones, preferring European and Swiss, Cypriot and Baltic ones.
Requirements for depositors
As already mentioned, opening a deposit in a foreign bank is much more difficult and problematic.
Therefore, you should be ready to submit such certificates that you have never heard of in your life.
There is also an article that already punishes those who have not reported to the authorities on their foreign exchange transactions.
This is written in, which indicates the size of the penalties, ranging from 5 thousand rubles. for physical persons up to a million rubles for legal entities persons.
If you did not report within a month after opening an account, a fine is also inevitable for late notification, from one thousand to five thousand rubles.
Also in this law there is a requirement for an annual report, which contains all the movements on your accounts, and in case of late filing or its absence, fines will also be inevitable.
How to make a deposit in a foreign bank
First of all, choose a country that is considered reliable for non-residents, then write a letter and clarify what will need to be prepared for the transaction.
Many banks require the depositor to be present in person when opening an account.
As in any bank, the appropriate documentation is required, and also a feature is an interview with a representative of a foreign bank, on which the possibility of placement in this bank will depend.
A good option under the terms will be the Baltic banks, banks of Latvia.With regard to branch banks, you can contact Citibank, which allows Russians to complete a deal outside of Russia with the least amount of problems.
What conditions are offered for Russians
As we already know, foreign banks do not throw high interest rates, so Russians can expect from 3 to 5% at best, and up to 1.5% on average. Otherwise, the conditions are based on the same ambushes as in Russia.
Required documents
In addition to the questionnaire itself, you will need such possible documents as:
- a foreign passport, and sometimes a second half, certified by a notary,
- certificate of income in the form of a bank for several years (depends on a particular bank),
- certificate of family composition,
- receipts for payment of utility bills,
- as well as a certificate certifying that you are not convicted and are under investigation. Such a certificate can be obtained from the police station.
This is the minimum package that you can focus on, but before processing, you should clarify the full package of documents.
If you open an account and have an existing one in one of the Russian branches, the solution will be much faster.
How to get the highest interest on deposits
Keeping up with interest will be extremely difficult when it comes to foreign investment. But, of course, you can familiarize yourself with several banks that provide the highest among their competitors.
We present to your attention a list of countries that are popular among Russian citizens, as well as those that have Cyprus banks, Latvian banks, and US banks are popular.
With regard to other countries, such as Switzerland, Belgium, Germany, these are reliable banks, but the interest is negligible, and the service will cost more than paying interest, so such options are not suitable for those who want to increase their capital.
Profitable offers from banks
Is there a possibility of registration for a short time
There is an opportunity, but it loses its meaning, tk. the percentage is very small, in comparison with our offers, the service is expensive, and the time for registration takes a lot.
Up to 1 year you can apply for almost any bank, and you can do it, but to what extent it will be rational and profitable.
Advantages and disadvantages
The advantages of this type of contribution will be:
Privacy and confidentiality The point is that if you have a company and want to hide your savings, then no, this is not about that. Privacy can be obtained by an individual Reliability Foreign banks are famous, first of all, for their reliability, therefore, when making deposits abroad, you do not have to worry about the return of funds, because in many countries, the law protects the savings of both residents and non-residents of the country, so you can always receive compensation from the state if the Bank closes, although this is extremely rare Great opportunities You can keep money in a bank abroad not only for the sake of reliability and payments, but also earn extra money by buying securities and other financial industries There are also several disadvantages:
- Low interest on deposits. Despite the popularity of foreign deposits, the biggest disadvantage is the inability to make money in this way.
- Expensive account opening and maintenance.
- Long registration process and high rejection rate that cannot be influenced.
- The impossibility of opening without personal presence, which burdens the process and significantly increases costs.
- Government reporting and fines.
The finance ministers of the eurozone countries have approved the allocation of financial assistance to Cyprus in the amount of 10 billion euros. This is less than the country needs: initially it was about 17 billion euros. Nicosia applied for help back in June 2012, but negotiations were hampered by the presidential elections in February and the disagreement of local authorities with budget cuts.
Cyprus (after Greece, Ireland, Portugal and Spain) has become the fifth eurozone member to receive international assistance from, and. The money received will go mainly to recapitalize the banking system, which is closely associated with Greece, which was hit by the debt crisis.
After 10-hour negotiations, Nicosia agreed to introduce a one-time tax on deposits - 6.75% for amounts up to 100 thousand euros and 9.9% above this threshold. Permanent tax is supposed to impose interest income from deposits. The innovations will take effect on Tuesday, March 19 (Monday is a bank holiday in Cyprus).
These measures will affect the citizens of Russia: according to estimates of financiers, of the $ 91.5 billion in Cypriot deposits, $ 18.3 billion belong to the Russians.
The introduction of taxes and fees on deposits should bring 5.8 billion euros to the Cypriot budget.
An announcement made overnight by Dutch finance minister Jeroen Deisselblum forced Cypriots seeking withdrawals to line up in front of banks on Saturday morning. But closing accounts is now problematic. According to Finance Minister Michalis Sarris, the transfer of large amounts through electronic banking systems will be blocked. Deposits subject to new levies are likely to be frozen on Tuesday, said ECB board member Joerg.
Such measures were taken specifically so that foreign investors, mainly citizens of Russia and Great Britain, could not withdraw money.
Without the introduction of restrictions, the main tax burden could fall only on the citizens of Cyprus, Asmussen explained.
The introduction of one-time fees on deposits is a unique measure related to the peculiarities of the bloated banking system of Cyprus, Deisselbloom acknowledged. “This is a contribution to ensuring the financial stability of Cyprus,” the official stressed.
Lenders also forced Cyprus to raise the corporate tax rate from 10% to 12.5%, the sources said. Corporate tax in Cyprus is the lowest in the eurozone countries, so many companies, including Russian ones, choose this particular jurisdiction for registration. Now the Cypriot rate will be equal to the Irish rate. Even 12.5% is too little, according to partners in the eurozone: for example, Dublin has been demanded to raise the tax on more than one occasion.
Without help, Cyprus would be in default.
In the event of a negative scenario, Russian banks working with companies of Russian origin registered in Cyprus would lose up to $ 50 billion, they calculated.
In particular, the volume of loans issued by Russian banks to Cypriot offshores at the end of 2012 amounted to about $ 30-40 billion. In addition, about $ 12 billion were placed in subsidiaries of Russian banks in Cyprus. Another $ 1 billion is the capital of subsidiary banks and companies in Cyprus.
Aid of 10 billion euros, tax increases and privatization of 1.4 billion euros will allow Cyprus to reduce its debt to 100% of GDP by 2020, Deisselbloom said.
The European Commission hopes that Russia will also take part in saving the Cyprus economy, said European Commissioner Olli Rehn. He hopes Moscow will refinance a € 2.5bn loan to Nicosia.
Cyprus requested a 5-year delay in repayment of the loan, until 2021, and a rate cut from 4.5% to 1.5-2 percentage points.
The Minister of Finance of Cyprus will fly to Moscow for talks next week. Cypriot President Nikos Anastasiades also hopes to raise the topic of economic aid at the meeting. He is due to visit Russia in the coming weeks.
In addition, Cypriot officials said that Russian investors are interested in buying a majority stake in Cyprus Popular Bank and in increasing their stake in the Bank of Cyprus. 9.7% of the bank still belongs to the structure of the former main owner.
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