Like any country also Cyprus has an sophisticated financial system. As being part of the European Union, it has also been attractive for international and commercial banking. In 2013 things changed. Having mainly investments in Greece, banks got into major problems. Adjustments took a number of months and when the sky was cleared, another crisis came up: Cyprus based FBME bank got placed under resolution by the Central Bank.
It seems that Cyprus banking is affected by a banking crisis. A crisis that will take little more for the country to recover from. Banking is based on trust. When customers don’t trust a financial institution or even the country, this institution is doomed to fail. A bank run, where people will take their money from the bank that eventually creates solvency trouble and force the bank into bankruptcy, is a logical result of a lack of trust.
To prevent a real banking crisis Cyprus banking has to reform and reorganize. It was one of the demands of the Trojka as well when they granted Cyprus billions in EU loans to avoid the countries bankruptcy.
The European banking system is stable. This is mainly the reason of the strong Northern European banks. Scandinavia, the United Kingdom, Germany, Belgium and The Netherlands, completed with Switzerland and Austria are considered the main countries for financial activities.
Banking in Northern Europe comes with real customer scrutiny. Risk avoidance is getting more important each and every day. It opens the door for banks in other parts of Europe to service customers with a different profile. Specifically for offshore companies, banks in the southern regions of the European Union are worth to consider.
Cyprus banking provides advantages and disadvantages. The main language in Cyprus is Greek. The second language in the country is English and the level of understanding is good. Therefore customer services lines are able to assist, but not in their mother tongue.
It is for cross border banking difficult to provide solutions in multiple jurisdictions. Getting approval for loans, credit cards or insurances is hard. Therefore Cyprus banking should be used mainly for banking transactions.