Cyprus: A Leading Maritime Centre
Cyprus has been a leading maritime center since ancient times and presently the shipping sector has evolved into a modern and successful industry. The island’s strategic location between three continents has made it an ideal place for trade and shipping business. In addition, Cyprus, as a member of the European Union, with modern infrastructure, an educated and skilled labor force and a high quality of life, is in an ideal position to service international shipping companies.
Shipping is an important industry for Cyprus, as it reportedly makes up for over 7% of the country’s economic activity (including ancillary services) and the sector employs around 4,000 employees onshore and 55,000 seafarers. The island has the 10th largest ship register in the world and the 3rd largest in Europe. With more than 1,800 vessels and gross tonnage of more than 21 million tons, Cyprus-registered tonnage accounts for around 4% of the world fleet. There are more than 60 ship-management companies operating on the island and some of these are among the largest in the world.
These facts also highlight the government’s commitment to support shipping, given its vital importance for the Cyprus economy. Significant incentives are offered for companies that are based in Cyprus, including an attractive corporate tax rate and special taxation arrangements, such as a favorable tonnage tax system. The island’s attractiveness as a business and financial center facilitates the setup and smooth operation of shipping companies. In addition, Cyprus combines an English based legal system, efficient civil service and strong professional sector.
For the continued development of the maritime cluster in Cyprus, it is important to support the island’s shipping companies with high quality legal, accounting and banking services. So the establishment of a new Shipping Center at the Bank of Cyprus was a natural consequence of the increasing importance of shipping for the Cyprus economy and its future prospects.
Economic and shipping market developments in coordination with new financial regulations, have assisted create a changing landscape in the field of Shipping Finance. Some established ship financiers have reduced their exposures or decided to exit shipping, which offers the opportunity to other institutions or new entrants, like the Bank of Cyprus, to selectively build a shipping portfolio.
The Shipping Center complements the Bank of Cyprus’ existing services to shipping clients but also attracts new business opportunities, as there are major growth prospects among, mainly Cypriot and Greek shipowners. With an increasing number of shipping companies either operating or setting up shop in Cyprus, they will need a local banking partner who they can trust and do business with. Due to the international nature of their business, such companies require a wide variety of banking services that the Bank can provide.
Importantly, the aim of our new Shipping Centre is not to provide just ship-finance but to promote and develop wholistic, truly two-way relationships with shipping groups and to create synergies with other departments of the Bank. The customer-focus mentality of the Bank of Cyprus and ability to provide high quality service with attention to detail, should greatly assist to the success of the Shipping Centre.
Head of Shipping, Bank of Cyprus