A number of changes in the market are indicating that a consolidation of the professional services sector (which includes Law Firms, Accountants and Fiduciary Companies) in Cyprus is imminent. In an ever changing world and at an increasing speed this may be inevitable, yet it also means that early action is key to successful transition.
Arguably, both the changes that could initiate the consolidation and the consolidation itself will eventually prove positive for the country as a whole, as well as the clients and professionals in the sector. However, until the new equilibrium is achieved (post consolidation), everyone should look into their business model and take the necessary steps to ensure business continuity and profit margin protection.
Below is the list of the six catalysts we consider as the most significant ones:
Following the circulars from the Central Bank of Cyprus, Cyprus banks are expected to restrict their services to companies that have an economic reason of existence, have sufficient substance to demonstrate that both effective management and control are performed from Cyprus and produce audited financial statements. This results in:
The scheme has been under the spotlight for some time now and its future is becoming uncertain. Even if it will continue to be available, its popularity might be affected by the:
Aside from their business model risks (NPLs, profitability, high expense base, competition from fintech companies, negative interest rates), banks in Cyprus will face a significant business reduction due to the above issues, not necessarily a bad thing in the long term.
Service providers find the account opening experience to be painful:
Consolidation is not necessarily evil. In fact, adapting timely to the new reality can only result in a sustainable business model in a professional, very transparent and compliant environment.
What are you doing to ensure business continuity?
The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.
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