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Cyprus Tourism Associations Warn Of Market Distortion Under New Recreational Areas Law

Fragmented Licensing Proposals Raise Concerns

The Association of Cyprus Tourist Enterprises and the Cyprus Hoteliers Association raised concerns over a proposed law on the establishment and operation of recreational areas, currently under review by the House Tourism Committee. In a joint statement, the associations said the proposal introduces a separate licensing framework that could create overlapping responsibilities across authorities.

Potential Impact On Market Integrity And Visitor Experience

According to the associations, the proposal would require an additional operating license for restaurants within hotel units, despite existing regulatory oversight. They said this could lead to duplication in licensing procedures and affect operating conditions across the sector.

Concerns Over Uniform Regulations And Noise Pollution

The associations also noted that the proposal applies uniform rules across different types of tourism establishments without accounting for operational differences. They said provisions related to operating hours and noise management may affect both business activity and visitor experience if not adjusted.

A Call For An Integrated And Coherent Approach

In their statement, the organisations said regulatory changes should be aligned within a single framework covering licensing, operations, and compliance. They argued that a coordinated approach would better support sector stability and service standards.

Strategic Legislative Delay

Stek and Pasyxe called on parliament to delay a decision on the proposal until a broader government initiative is completed. They said a revised bill should reflect sector requirements and broader policy considerations before being adopted.

Cyprus Banks Urged To Focus On Long-Term Resilience As Profits Remain Strong

The Cypriot banking sector remains in a strong position, supported by solid capital buffers and overall financial stability, according to speakers at the annual general meeting of the Association of Cyprus Banks. At the same time, government officials and regulators stressed that maintaining this position will require continued discipline and long-term planning.

A Strong Sector, But Not A Complacent One

Finance Minister Makis Keravnos used the meeting to highlight concerns over draft laws recently passed by parliament, which, according to the Ministry of Finance, the Central Bank and the Legal Service, may contain constitutional, legal and institutional issues. Those concerns, he noted, led to presidential referrals and remittals to the Supreme Court.

Keravnos also said the European Central Bank had been consulted on proposed measures concerning the suspension of foreclosures and the restructuring of loans and guarantees, adding that the ECB had expressed its own concerns.

Profitability Should Reflect Real Economy Lending

While acknowledging that the banking sector remains highly profitable, Keravnos said earnings are expected to reach around €1 billion in 2025, lower than in 2024 as interest-rate conditions gradually normalize.

He said he would prefer bank profitability to rely more on lending to businesses operating in productive sectors and less on the widening of European Central Bank interest-rate spreads.

According to the minister, Cyprus’ return to investment-grade status after 11 years has strengthened the country’s appeal to foreign investors, technology companies and startups. He said this should encourage banks to offer financing that better supports businesses while improving the diversification of their loan portfolios.

The Central Bank’s Warning: Strength Today Is Not A Guarantee Tomorrow

Central Bank Governor Christodoulos Patsalides also warned against complacency, saying the sector’s current strength should not be taken for granted.

“The Cypriot banking sector is strong today. But strength that truly matters is not exhausted by a capital ratio, a profit line or a favorable cycle,” he said.

Patsalides added that lasting resilience depends on institutions remaining strong as conditions change, risks become more complex, and competition evolves. In his view, that requires sufficient capital buffers, adaptable infrastructure and management teams prepared for changing market conditions.

Long-Term Resilience Over Short-Term Gains

Patsalides also stressed that banks should focus on long-term resilience rather than short-term performance. Decisions on dividend policy, capital allocation and the use of resources, he said, should take into account continued investment in technology, operational resilience, human capital and long-term adaptability.

He added that banks able to remain competitive over time will be those that invest early in strengthening their capacity to adapt and respond to future challenges.

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