In a period of reshaping within the Cypriot financial services sector, several Russian companies are bidding farewell to the island.
This exodus is driven by the departure of entities that had long considered Cyprus their base, with more expected to follow suit.
Prominent businesses with substantial operations are opting for relocation, either to Russia, specifically in special administrative regions, or to countries such as Kazakhstan.
Here’s an in-depth look at the evolving situation:
- TCS Group Holding: The upcoming Monday, January 15, will mark the final decision day for TCS Group Holding, the parent company of Tinkoff Bank. Having been registered on the island for the past two decades, the company confirmed in November its serious consideration of departure. The ultimate verdict is slated for the early part of the upcoming week, with plans to relocate to one of Russia’s special administrative regions, specifically the Oktyabrsky and Russky Islands. TCS is a digital financial services provider.
- Etalon Group: Shareholders of Etalon Group gave the green light for the company’s relocation to the special administrative region (SAR) on Oktyabrsky Island in the Kaliningrad region on December 15, as reported by the Russian news agency Interfax. Etalon, a real estate company engaged in land development in St. Petersburg and Moscow, covers an extensive area of 6.6 million square meters.
- Fix Price: Owned by Sergei Lomakin, the proprietor of the Pafos FC football team, Fix Price decided on November 9 to transfer its legal headquarters from Cyprus to Kazakhstan. The company will now be registered within the territory of the International Financial Center of Astana in Kazakhstan. Fix Price, established by Lomakin and Artem Khachatryan, is a discount store chain with over 5,000 subsidiaries in Russia and former Soviet Union countries, reporting revenues of $4 billion in 2022.
- United Medical Group CY Plc: This company, in a statement last September, announced that the relocation process depends on the regulatory authorities of the Republic of Cyprus. Reports from Interfax suggested a move to Russia, while Moscow Times did not rule out the possibility of the new headquarters being in Kazakhstan. United Medical Group CY Plc is the parent company of EMC, managing a network of private medical clinics, including seven multidisciplinary medical centres, a maternity clinic, and a rehabilitation centre, along with three nursing homes in Moscow. EMC’s annual turnover at the end of 2022 amounted to €326.3 million, a 12.4% increase.
- Other Companies: Since last summer, three more companies, namely Transmashholding, Globaltrans, and Ozon, have decided to leave Cyprus. Ozon, often referred to as the “Amazon of Russia,” founded in 1998 as an online bookstore, evolved into one of the three largest online stores in the country by 2019.
- Sbermarket: In March 2023, the food delivery service Sbermarket re-registered from a legal entity in Cyprus to a special administrative region (SAR) in the Kaliningrad region.
Recent reports from Russian media outlets underscore the mass departure of companies from Cyprus, linking this phenomenon to the stance adopted by Cyprus.
A Moscow Times report highlighted data on business entities owned by Russian oligarchs, attributing the exodus to the prevailing situation in Cyprus and the new order of things. It stated that at least 10 of the largest Russian companies decided to leave Cyprus from the beginning of 2023. Before the war, Russian residents held $162 billion in direct investments in Cyprus, five times higher than the Gross Domestic Product (GDP).
It further mentioned that Cyprus authorities initiated an investigation in the spring regarding Russian presence on the island, opening a total of 29 cases after the sanctions imposed in April by the United States and the United Kingdom against 13 companies and individuals found hiding the financial details of oligarchs. Among these were Roman Abramovich and Alisher Usmanov.
A Cypriot industry insider, commenting on the situation, estimated that there would be a cost for the sector. However, many service providers, anticipating the situation and future developments, have taken measures. In such cases, the cost for them is expected to be minimised, the insider remarked.