Fat cats bail out tax havens
In order to preserve the attractiveness of offshore financial centres, the governments of post-Soviet countries are ready to support them financially, according to KW. KW looked into the situation.
International efforts to put an end to the use of Swiss bank accounts for tax evasion are producing tangible results. According to assessments of UBS, quite soon the bank could lose over 10% of all deposits of European clients (US $12.8-31.9 bn). At Credit Suisse, the outflow from accounts of European clients is predicted at around US $37 bn.
On the same note Cyprus, which has traditionally had the reputation of a safe tax haven, begins to feel capital drain. First of all, after the country began to feel the cold breath of the debt crunch, clients’ trust in the Bank of Cyprus began to fade. Secondly, trying to meet the authorities of Europe and the U.S. halfway, Cypriot banks started to show more co-operation in sharing information about their clients’ accounts. In looks like at least a part of the money of Western European tycoons that began to take flight from tax havens will return to their native countries.
Last year, Moscow agreed to provide a EUR 2.5 bn loan to Cyprus for 4.5 years. This summer, Nicosia once again requested financial assistance from Russia. This time we are talking about a EUR 5 bn loan. According to unofficial information, Moscow already gave a positive response.
“It can be assumed that the political lobby of post-Soviet countries will facilitate allocation of loans to Cyprus to preserve the status quo. This is exactly what we currently observe in Russia,” Bohdan Zborovskiy, a lawyer at Vasyl Kisil & Partners said in a comment to KW.