BOC’s Panicos Nicolaou desribes proposed taxation of banks’ windfall profits as "political risk”

The CEO of the Bank of Cyprus Group, Panicos Nicolaou, has sounded an alarm on the blow to the wider economy, as well as to the reputation of Cyprus as an investment destination, that would result from the proposed taxation of windfall bank profits.

Speaking during the press conference for the presentation of the Group's financial results for the first quarter pm 16 May, and asked to comment on AKEL's intention to submit a proposal for a law on taxation of excess profits, Nicolaou warned that this would damage the credibility of the country.

“Amidst geopolitical risks and reputational risk, if this proposal goes ahead we will enter the category of states with political risks. Whether the Government adopts it or not is nobody's business. It is a political risk, which will hang over the country and we must avoid it," he stressed.

At the same time, the CEO of the Bank of Cyprus Group indicated that "you cannot say that you want to attract investments and then, on your own, change the rules of the game and tax foreign investors."

"It will be a stain on the credibility of Cyprus and it will remain with us, for no reason at all," he pointed out.

"The country's economy is running at the highest rate in Europe, our surpluses are high. Is there a reason to hand over €50 million a year, as they calculate it and damage the credibility of the country forever? Is there a serious economic reason?", he asked, going on to emphasise: "No, there isn't."

In addition, he added, "the banks are the only ones paying the deposit fee from 2012 onwards, specifically €75 million per year. So the investors-shareholders of the banks are already paying, whether the banks had profits or not."

"We must not compare ourselves with other countries"

Also, he continued, "comparing with some other countries, like Italy where the tax is less than what we already pay, or Spain where there is no tax on deposits, is not correct. We are trying to create an issue by ourselves for no reason. This is what bothers me personally."

"Are we trying to put our country in a category of countries that change the rules of the game by themselves? For what reason; We are irreparably harming the country", he warned, while also referring to recent reports by the Prime Minister of Greece, Kyriakos Mitsotakis, about the taxation of banks.

As he said, "when they asked the Prime Minister of Greece in London if they were thinking of taxing the banks, he told them 'we can't try to enter the investment tier, attract investment and come and tax the investors.'"

"It is not possible that at the time when we are bringing in communication companies to do branding for us we are at the same time debating in the Parliament whether we will tax the banks," Nicolaou underlined.

"Why is it bad for a bank to make a profit?"

Besides, in a comment that party pressures are being exerted on the supervisors and the executive power regarding the high profitability of the banks, the CEO of the Bank of Cyprus Group stated that, "I cannot understand why some private companies, such as banks with foreign investors, whom this country is trying tooth and nail to keep, are prohibited from making profits.”

"Why is it bad for a bank to make a profit? Do only the banks make profits?", he asked to emphasise that "there are companies that have a much better return on equity than the banks. Why isn't anyone involved with them?," he asked further.

"We understand that banks are dealing with many people. We try to help our customers. 96% of our customers do their transactions online, most of which are carried out free. Also, we are the only bank that offers the possibility of having a free account, without any fees."

Furthermore, he added, "we offer housing loans with a fixed interest rate for up to 25 years. In addition, all services to pensioners (people over 65) are offered free of charge. We are also the only bank that does not charge any ATM fees when you make a deposit."

"We try as much as possible to contribute from the CSR side as well. I think we are an organisation that has proven that we don't mind contributing to the greater good and we do," he pointed out.

Closing his presentation, Nicolaou wanted to send the following message: "Without financial stability, without healthy banks financing the economy, and without foreign investment, there is no economy."

"The fact that the economy is doing well is because the banks have slowly recovered," he concluded.

It is noted that, according to data provided during the press conference, the Bank of Cyprus paid a total of €144 million in taxes last year alone.

(Source: InBusinessNews)