There is a sense, though, that even after a workable solution will eventually be found, Cyprus’s reputation as a banking and financial centre – which had taken some knocks in recent months – may be beyond repair.
In the meantime, attitudes towards Europe generally and certain countries within it – and towards Russia – have flared, where once no one paid much attention to them.
Above all, there is among many expats, as in the general Cyprus population, an air of defiance, many of those living there say, coupled with considerable concern about the future.
“Some people believe that Cyprus is caught in the middle of a ‘war’ between Germany and Russia over money laundering allegations,” reports Nigel Howarth, an expatriate property consultant and editor of Cyprus Property News.
They do not understand, he adds, why laundered Russian money is such a concern to Europe, when so little interest appeared to be shown in money recently reportedly to have been laundered by HSBC in the US, or in the way major financial institutions are said to have rigged LIBOR rates.
Howarth says Cyprus expats, like many Cyprus nationals and those elsewhere in Europe, struggle to get past the idea that the government came close to ignoring an existing depositors’ compensation scheme, even though that idea has now been taken off the table, following a unanimous vote by Cyprus lawmakers against it on Tuesday.
“I don’t think that anyone believed that Europe would have the audacity to instruct Cyprus to ‘steal’ money from bank depositors," Howarth said. "It sets a very worrying precedent for any future bailouts – Spain, Italy, etc.
“The damage has been done – Cyprus has made headlines around the world for the wrong reasons. I can see many business moving overseas – Latvia has been mentioned – and a lack of investments coming into Cyprus for years.”
‘Fairly calm’
Martin Treanor , managing director of Fraser Mackinlay, an advisory firm with offices in Limassol, says his mostly-British clientele is “fairly calm”. One reason may be that the company’s advisers have been telling their clients not to hold any monies in Cyprus, other than day-to-day living expenses, for the last three years.
Now, he says, the company is getting calls from non-clients seeking advice on currency transfers and offshore banking, which are among the areas Fraser Mackinlay is, in fact, able to help with.
Among the measures Fraser MacKlinlay has taken to help its existing clients through the crisis has been to instructed all of the institutions with which it works – such as life offices, and QROP & SIPP providers – “to cease payments to Cyprus bank accounts until the situation is resolved”.
“We have asked clients to advise us of [any] non-Cyprus bank accounts [they may have] as an alternative, as well as offering to help open up offshore banking facilities if required.”
ATMs still work
Although Cyprus’s banks are due to remain closed at least until next Tuesday, Treanor, Howarth and others say that automated teller machines are, for the most part, working, which is helping to keep life from coming to a standstill.
Tony Pentland, head of business development at the 3D Global advisory firm, says he has found that those ATMs with cash in them typically will not dispense that cash, except to those who insert a credit or debit card from the bank in question – in other words, cards belonging to rival banks "will not be accepted".
"That includes any expats with UK bank accounts – for example, a Nationwide card will not work in a Laiki Bank ATM, and so on. This puts more pressure on the local community as well as the expat community.
It’s cash-only now in the petrol stations.
"The belt is tightening."
Keeping calm and carrying on…
At Fraser Mackinlay, Traynor says the company is providing its clients with daily updates and personal consultations, and takes the attitude that avoiding inducing, or helping to induce, "a false sense of panic" is important.
"We remain confident that a workable solution will be found, although possibly not until the eleventh hour.
"This is no longer purely an economic crisis but a political one with potential huge consequences for the future of the Eurozone."
