Offshore Banks may be forced to Consolidate

Until now, offshore private banks in Europe are enjoying stability due to excess liquidity and low asset risk. However, Standard and Poor’s reports that the pressure to sustain profit growth rates may force some private banks to consolidate or acquire their competitors.

Burmese Leaders Eye Hongkong Banks

Singapore banks, which are believed to be the offshore banking destination of Burmese generals has started to distance themselves from the latter, at the urging of the United States. This is reportedly resulting to a quiet, if not frantic, search for new banking centers.

It’s definitely not because of lower taxes, since Switzerland imposes stiffer rates compared to Russia.

Russia’s daily online “Kommersant” reported that the giant Russian company Gasprom’s Shtokman Development Company, which is to invest $43 ~ 44 billion (at current prices) in Gas Condensate will be incorporated in Switzerland on December 20, 2007.

“Registering and servicing firms is still four or five times less expensive in Cyprus than in any other jurisdiction with agreements on avoiding double taxation. That’s why Cyprus is still the leader for Russians to set up holdings.”

The Kommersant reports that the number of Russians who prefer to register their companies offshore continue to increase, with more than 2000 companies being registered in Cyprus on 2006. In addition. companies registered in UK, Luxemberg and Netherlands are reported to be increasing their activities in Russia.

According to experts, though the most visible reason for wanting to invest offshore is the avoidance of high domestic taxes, Russians prefer to incorporate offshore mainly because of their desire protect their ownership of their companies, build relations with their stockholders and balance the interests between company managers and employees.

Most importantly, more companies are now finding it more advantageous to be identified as coming from prestigious countries. This is evidenced by the increased interest in countries like Swtizerland, Austria and Denmark which has harsh tax laws compared Russia. A lot of companies believe that the high international status of those states more than compensates the high taxes being being levied upon them.