Cyprus Banking Crisis Not Likely to Sink the Island?

While Cyprus political leaders hash out the details of the latest proposal to bail out the country’s financial institutions, multinationals with interests in the island nation may wonder if the time has come to seek higher ground.

It’s a valid question, write Pavlos Aristodemou and Peter Tarn of law firm Harney Westwood & Riegels, but corporate leaders should know that a general collapse of the Cypriot economy isn’t likely:

“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…

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.”

Read the full update (which includes details of an upcoming webinar hosted by the firm to discuss legal issues related to the current situation): Legal Impacts of the Cyprus Banking Crisis -Harney Westwood & Riegels>>