Australia exposure to Cypriot levy limited
At the same time, Cypriot banks had just shy of $2 billion in loans spread through the economy here. Most of these were small business and housing loans, with banks such as Laiki Bank or Bank of Cyprus targeting the Cypriot community.
In 2011, a majority stake in Cyprus-backed Laiki Bank Australia was sold to Bank of Beirut - Lebanon's biggest bank - for $420 million. Laiki was renamed Beirut Hellenic Bank, with Bank of Beirut retaining an option to move from its existing 92.5 per cent holding to full ownership.
Later that year, regional lender Bendigo and Adelaide Bank paid $130 million for the local arm of Bank of Cyprus Group, a move that marked the European bank's exit from Australia.
Rather than fold the business into the broader Bendigo, the regional lender has since renamed Bank of Cyprus as Delphi Bank to give it a distinct identity. At the time of the deal, executives from Bendigo noted the high quality of the Bank of Cyprus lending book. Of more than $1 billion in loans, just a handful were classed as non-performing, with almost the entire lending book backed by property.
Even if the local banks continued to be controlled by Cyprus-based banks, banking rules require them to operate as their own stand-alone business with a local board.
All foreign banks operating in Australia come under the scrutiny of bank regulator the Australian Prudential Regulation Authority.
While Europe has imposed tax on Cypriot bank deposits to help pay for the €10 billion bailout, this tax would not have extended to Australian-based subsidiaries.
Even so, Australians that have funds on deposit in banks in Cyprus would still face being hit with the new bank levy, which includes a scaling tax on deposits that starts at 6.75 per cent.
Australian banking exposure to Cyprus is small, running at just $76 million, according to Bank for International Settlements figures.
Frequently Asked Questions about this Article…
According to the article, Australians had nearly $1.6 billion in deposits tied up with Australian-based subsidiaries of Cypriot banks just two years earlier.
Cypriot banks had just shy of $2 billion in loans in Australia, mostly small business and housing loans, many targeted at the Cypriot community.
The article states that the European tax on Cypriot bank deposits would not have extended to Australian-based subsidiaries, so those local entities were not subject to the levy.
Yes. The article notes that Australians with funds on deposit in banks in Cyprus would still face the new bank levy, which includes a scaling tax on deposits starting at 6.75%.
In 2011 a majority stake in Cyprus-backed Laiki Bank Australia was sold to Bank of Beirut for $420 million. Laiki was renamed Beirut Hellenic Bank, and Bank of Beirut retained an option to move from its existing 92.5% holding to full ownership.
Also in 2011, Bendigo and Adelaide Bank paid $130 million for the local arm of the Bank of Cyprus Group. Rather than folding it into Bendigo, the business was renamed Delphi Bank to give it a distinct identity.
Executives from Bendigo noted the high quality of the Bank of Cyprus lending book: of more than $1 billion in loans only a handful were classed as non‑performing, and almost the entire lending book was backed by property.
Yes—foreign banks operating in Australia are subject to scrutiny by the Australian Prudential Regulation Authority (APRA) and must operate as stand‑alone businesses with a local board. Overall Australian banking exposure to Cyprus is small, about $76 million according to Bank for International Settlements figures cited in the article.
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