March 28 - Hong Kong, Singapore and the British Virgin Islands could stand to benefit from the Cyprus banking crisis as depositors seek a new safe-haven for their money. Ivor Bennett reports.
(SOUNDBITE)(English) IVOR BENNETT, REUTERS REPORTER, SAYING: "It's still a popular holiday destination, but as a tax haven, the sun is no longer shining on Cyprus. With potential levies of up to 40%, depositors are desperate to get their money out. The question is - where will they go next?" (SOUNDBITE)(English) NICHOLAS SHAXSON, AUTHOR, SAYING: "The broadest shift has been towards Asian tax havens, particularly Hong Kong and Singapore. I think those havens will see some in flows as a result of this." Cyprus became such a popular tax haven that its banking sector is now 7 times the size of its own GDP. It's thought Russian investors account for the bulk of non-EU deposits - worth 19 billion euros. Analysts say that money will now be on the move, but what will investors be looking for? (SOUNDBITE)(English) NICHOLAS SHAXSON, AUTHOR, SAYING: "Secrecy is the prime or a prime factor. And what are the reasons for secrecy? Many different reasons but criminal activity is one important one and I know cases you know involving Cyprus, involving really quite nasty business going on." (SOUNDBITE) (English) IVOR BENNETT, REUTERS REPORTER, SAYING: "Now there are still some spots left in Europe to lure investors. The old favourite Switzerland for example. Banking secrecy there has been scaled back but it's still open to some money coming from outside the EU. And there's Gibraltar too - which has the added bonus of a British legal system. But for a real change of scene, the Caribbean may prove more appealing." (SOUNDBITE) (English) NICHOLAS SHAXSON, AUTHOR, SAYING: "Perhaps the biggest beneficiary will be the British Virgin Islands, which is the biggest company and corporation centre in the world. Again that's another British territory with reassuringly solid British laws. Britain has allowed the BVI to set up very strong secrecy. It's never tried to crack down on it." There's certainly no shortage of choice on where to go next. But the Cyprus ship has already sailed. Those who still have money there face the problem of getting it out.