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Tax Reform Legislation Near Finalization, Minister Announces

Overview

The Minister of Finance, Makis Keravnos, confirmed that the legislative drafts for the upcoming tax reform are nearing completion. Currently under review by the Legal Service, these bills are expected to be finalized in the coming days. In a statement delivered on Wednesday, the Minister emphasized that the framework underpinning the reform remains consistent even as specific provisions continue to be refined.

Meaningful Engagement With Stakeholders

During an afternoon meeting with the Commissioner of Taxation and representatives from the General Secretariat of the Social Dialogue (SEK), additional proposals for the reform were presented. Both sides engaged in a productive dialogue, with the Minister noting, “We exchanged a range of forward-thinking ideas that are critical to enhancing the final product.” This interaction underlined the commitment to developing a balanced fiscal framework that incorporates diverse perspectives.

Enhancing Social Equity Through Fiscal Measures

The discussions also highlighted the importance of addressing tax evasion and providing support to vulnerable segments of the workforce. Notably, it was pointed out that nearly one in two employees may not immediately benefit from the reform. As a result, the government is evaluating measures to create reciprocal benefits and improve the overall social equity of the tax system. Moreover, the integration of complementary initiatives, such as reforms to the pension system, is expected to further secure societal interests while ensuring fiscal responsibility.

Moving Forward With Adaptability

The Minister reassured that adjustments will be made as necessary up to the last moment, a common practice in budgetary and legislative processes. He underscored that while the fundamental philosophy of the tax reform remains unchanged, specific elements can and will be modified in response to ongoing consultations and new insights.

Conclusion

As the legislative proposals continue to evolve within the Legal Service, the government remains committed to a transparent and inclusive process that supports both fiscal efficiency and social justice. The Minister and senior officials reiterated their openness to further discussions and looked forward to a final version that holistically addresses the challenges of modern taxation and social policy.

Bank of Cyprus Upgrade Signals Fresh Optimism For Greek And Cypriot Banks

Regional Banks Enter A More Favorable Cycle

Bank of Cyprus and Eurobank are well positioned to benefit from a renewed re-rating of Greek and Cypriot bank stocks, according to Cyprus-based investment firm Roemer Capital, which upgraded Bank of Cyprus to a buy rating and reaffirmed its positive view on Eurobank.

The firm cited easing geopolitical tensions, resilient economic growth in Greece and Cyprus, lower funding costs and Greece’s expected transition to developed-market status as the main factors supporting the sector.

Roemer Capital also lowered its cost of equity assumptions, updated its forecasts following first-quarter 2026 results and extended its valuation horizon to the end of 2027, raising target prices across its banking coverage.

Bank Of Cyprus Gets The Largest Upgrade

Bank of Cyprus received the biggest revision, with Roemer Capital upgrading the stock from hold to buy and setting a target price of €11.10, implying potential total upside of 27%.

The firm highlighted the bank’s strong capital generation, profitability and projected 100% dividend payout, describing it as the strongest capital-return story among the banks under coverage. Roemer Capital maintained its buy rating on Eurobank, assigning a target price of €4.90 and forecasting potential upside of 28%. The report said the bank is well placed to benefit from loan growth, improving operating performance and merger-and-acquisition synergies.

National Bank of Greece and Piraeus Bank also retained buy ratings, with expected returns ranging from 25% to 36%. Optima Bank was upgraded to buy, while Alpha Bank remained at hold on valuation grounds.

Why Growth Still Sets The Region Apart

According to Roemer Capital, Greek and Cypriot banks continue to benefit from stronger economic fundamentals than many western European peers. The report pointed to faster economic growth, healthier balance sheets, low levels of non-performing exposures, capital ratios approaching 20% and strong customer deposit bases.

Analysts expect performing loans across the sector to grow at a compound annual rate of 6% to 8% through 2028, supported by private investment, digitalisation, green manufacturing, supply-chain expansion and a gradual recovery in household lending.

The report also said the conclusion of lending under the EU Recovery and Resilience Facility is unlikely to materially affect credit growth, as banks have already shifted back towards traditional commercial lending. Roemer Capital expects Euribor to remain between 2.2% and 2.5%, a level it believes should support both lending activity and net interest margins.

Geopolitics, Valuation And Market Structure Support The Case

The report said improving geopolitical conditions have strengthened the investment outlook, noting that Brent crude prices have largely returned to pre-war levels while Greek government bond yields have stabilised at around 3.5%. Although geopolitical risks remain, Roemer Capital believes the likelihood of a major inflationary shock or significant pressure on bank profitability has eased.

Another important catalyst identified by the firm is Greece’s expected promotion to developed-market status by FTSE Russell, STOXX and MSCI over the coming months.

According to the report, the reclassification should improve liquidity and attract a broader base of international investors. Roemer Capital also said Euronext’s acquisition of the Athens Exchange is expected to strengthen market infrastructure and increase international visibility, particularly for Bank of Cyprus and Optima Bank.

The firm noted that Bank of Cyprus has already benefited from its Athens listing, with average daily trading value increasing from less than €400,000 before its September 2024 move to nearly €6 million afterwards.

Economic Momentum Remains A Core Tailwind

Roemer Capital said both Greece and Cyprus have moved beyond post-crisis recovery and are now supported by private-sector-led growth. For Cyprus, the report highlighted recent tax reform and efforts to simplify the legal and regulatory framework, while also noting that limited foreign banking competition continues to support domestic lenders.

Overall, Roemer Capital expects Greek and Cypriot banks to remain well-positioned for profitable loan growth over the coming years.

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