Moody’s downgrades Cyprus institutions

16/01/2013

Concern about Cyprus’ bailout talks forces a rating service to take action. Also in business news: Serbia is planning deals with the United Arab Emirates.
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Moody’s downgraded its ratings for the Bank of Cyprus and two other institutions. [AFP]

Moody's Investor Services announced on Monday (January 14th) it has downgraded the top three commercial banks in Cyprus over uncertainty around the country's bailout talks. Bank of Cyprus, Laiki Bank and Hellenic Bank were downgraded to Caa2 with a warning of possible further downgrades in the future. Last week, Moody's cut the island's sovereign rating by three notches to Caa3.

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Serbia expects several deals worth hundreds of millions of euros with the United Arab Emirates (UAE), Deputy Prime Minister and Defence Minister Aleksandar Vucic told Beta news agency after a three-day visit by Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed al-Nahyan in Belgrade. He explained a 100 million-euro deal related to the Balkan country's weapons industry will be signed next week, and two more defence contracts will come by the end of this month. UAE officials have also demonstrated interest in investing in other sectors.

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Rating agency Standard & Poor's announced on Monday it no longer has a ratings deal with Turkey's government, but will continue to offer assessments on the country's economy. All ratings on individual Turkish debt will be withdrawn as of February 14th, the company said.

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The Greek parliament approved in the early hours of Saturday (January 12th) a series of tax hikes aimed to raise budget revenues as part of the country's efforts to continue to receive aid from its international creditors. The new legislation removes many tax exemptions, increases tax rates on property and corporate profits and introduces a capital gains tax on share sales. The goal is to generate 2.5 billion euros of additional revenues in 2013 and 2014.

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The European Commission announced it has allocated 65 million euros to support Kosovo's EU reform efforts. The funds will go to the justice and public administration systems, investments in education and regional development, as well as to provide housing and job opportunities for minority members, currently living in lead-contaminated camps. The private sector will also benefit, since part of the funds will be used to support SMEs and strengthen the country's trade capacities.

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Turkish company Kurum International AS announced on Friday (January 11th) it has won a tender for the privatisation of the four hydroelectric power plants in Albania. The company offered 109 million euros. Kurum also owns Elbasan Steel Manufacturing Facilities, a lime manufacturing plant and a 120,000-sq.m shipyard in Durres Port in Albania.

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The VAT in Cyprus increased from 17 percent to 18 percent. This was the second hike of the rate in 10 months, with another one expected in 2014. The move is part of the government's efforts to raise funds for the island's ailing economy.

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Albania's economy is beginning to slow down after two years of resilience to the eurozone crisis, the IMF said in its annual review of the country's economy. The fund expects 2012 GDP to less than 1 percent, with a slow recovery up to 1.3 percent forecasted for 2013.

This content was commissioned for SETimes.com.
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