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, Australian exposure to Cyprus is small. Bank for International Settlements (BIS) figures put direct Australian banking exposure to Cyprus at about $76 million. (The article also notes that two years earlier Australians had nearly $1.6 billion in deposits with Australian-based subsidiaries of Cypriot banks and Cypriot banks had just under $2 billion in loans in Australia.)
No — the article says the tax Europe imposed on Cypriot bank deposits to help pay for the €10 billion bailout would not have extended to Australian-based subsidiaries of those banks.
Yes — the article warns that Australians who have funds on deposit in banks in Cyprus could still be affected by the new bank levy, which includes a scaling tax on deposits starting at 6.75%.
In 2011 a majority stake in Laiki Bank Australia was sold to Lebanon's Bank of Beirut for $420 million. Laiki was renamed Beirut Hellenic Bank, with Bank of Beirut holding 92.5% and retaining an option to move to full ownership. The sale moved the local business under new ownership and branding.
Also in 2011 the regional lender Bendigo and Adelaide Bank paid $130 million for the local arm of the Bank of Cyprus Group. Bendigo kept the operation as a distinct business and renamed it Delphi Bank, marking the European group's exit from Australia.
At the time of the Bendigo deal, executives noted the Bank of Cyprus lending book was high quality: 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 — the article explains that foreign banks operating in Australia are required by banking rules to operate as standalone businesses with a local board, and all foreign banks in Australia come under the scrutiny of the Australian Prudential Regulation Authority (APRA).
Based on the article, direct exposure appears limited: Australian subsidiaries are locally regulated, key Cypriot operations in Australia were sold to local or regional buyers, and BIS figures show relatively small direct exposure ($76 million). However, Australians with deposits held in banks actually located in Cyprus could be vulnerable to the bank levy described in the article.
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