HSBC Causes Controversy In Cyprus

by Carla Johnson, Investors Offshore.com

08 January 2002

Over the New Year, international bank HSBC has caused controversy by opening three bank branches in the disputed Turkish Republic of Northern Cyprus, a territory which is recognised only by the Turkish authorities.

HSBC acquired the three branch offices when it purchased the ailing Turkish bank, Demirbank, last year. However, the Central Bank of Cyprus recently stated that it was not made aware of HSBC's plans to rebrand its Cypriot acquisitions over the New Year. There are fears that the bank may have stepped into a political minefield by appearing to give the occupied territory international credence.

The Governor of the Central Bank of Cyprus, Afxentis Afxentiou, seems to believe that the situation has arisen more out of insensitivity to the situation in Cyprus than the desire to give political credence to the Turkish regime, confirming to the UK Daily Telegraph on Monday that: 'I do not exclude the fact that when HSBC purchased this bank it may not have realised that some sensitivities could be roused in Cyprus due to these three branches in the occupied area.'

Meanwhile, a spokesman for HSBC said that the organisation was looking into the suggestion that the Central Bank had not been informed of its plans, and stressed that the bank considered itself 'stoutly apolitical'.

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