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Legal Updates

Developments in law or practice in our jurisdictions

Legal impacts of the Cyprus banking crisis

Publication Date:
20 March 2013

20 March 2013 - Harneys is closely monitoring the evolving situation in Cyprus. Naturally we have, over the past few days, been assisting those of our clients who have accounts in Cyprus or corporate structures which involve Cyprus entities in evaluating the soundness of these structures and attempting to identify potential repercussions of the current crisis.

While it is too early today to say how the present situation will be finally resolved, one thing which is clear to us is that a contagion scenario which sees Cyprus corporate structures undermined as a result of instability in the island’s banking system is remote. There is an important distinction between the Cyprus banking system and its corporate vehicles. Even in the midst of the uncertainty of the past few days we have continued to assist blue chip firms and financial institutions with structuring projects involving Cyprus vehicles with offshore assets. This is a vote of confidence which we strongly second.

Migrating corporate structures out of Cyprus is however a perfectly legitimate option, which a number of people are considering. We are a law firm and do not administer any companies or other structures in Cyprus; we would not attempt to substitute our commercial judgment for that of our clients but would encourage careful consideration. Every corporate domicile holds its own risks and its own advantages and even in the present climate we believe there is absolutely no reason to make decisions such as these precipitously or based on fear. Harneys through our worldwide network of offices and in-depth jurisdictional expertise is prepared to assist you by giving you the legal advice you need to make those decisions for yourself.

Our lawyers in Cyprus, London, Hong Kong, the Cayman Islands and elsewhere in the world remain at the ready to render whatever legal assistance may be required, and will continue to be available as the situation evolves.

The government of Cyprus has announced that banks in Cyprus will not reopen before Tuesday, 26 March. We will host a webinar on Monday 25 March at 11 am GMT during which we will provide the most current information on the situation as it is and address the legal issues which arise from the current situation and some hypothetical scenarios.

Specific topics we plan to address include:

To register for the webinar please click here. There is no charge to attend this webinar however registration through our webinar provider Brighttalk is required. If you encounter difficulties with registration please contact us.

For more information please contact Peter Tarn at +44 207 842 6082 or peter.tarn@harneys.com or Pavlos Aristodemou at +357 258 20020 or pavlos.aristodemou@harneys.com.