Russia rules out refunding depositors at Cypriot banks

'If someone gets stuck and loses money in those two biggest banks, that's really too bad,' says minister

A man walks past a branch of Bank of Cyprus in Nicosia . Photograph: Yorgos Karahalis/Reuters

A man walks past a branch of Bank of Cyprus in Nicosia . Photograph: Yorgos Karahalis/Reuters

 

Russia has ruled out bailing out people or companies that stand to lose money held at Cyprus's two largest banks.

"If someone gets stuck and loses money in those two biggest banks, that's really too bad," Russia’s first deputy prime minister Igor Shuvalov said in an interview broadcast late yesterday on Russian state television. "But the Russian government isn't planning to do anything in this case."

Russia turned away requests from Cyprus for additional financial assistance last month after criticising plans that would have forced losses on insured deposits.

President Vladimir Putin ordered the government to resume talks with the cash- strapped Mediterranean island on restructuring its€2.5 billion loan granted in 2011 after an agreement reached last month over a new European-led rescue.

Russia's government bristled at suggestions that it was responsible for bailing out the euro member as politicians from states including Germany alleged that Cyprus was used to launder illegal Russian money.

Funds held by Russians on the island aren't all illegal, Mr Shuvalov said. "There's money on which taxes weren't paid, and there's money where taxes were paid but for some reason people decided to keep it in Cypriot banks," he said.

Russia would be willing to discuss "specific instances," where companies partly owned by the state or individuals are facing "serious losses," from deposits held at Bank of Cyprus or Cyprus Popular Bank, according to Mr Shuvalov.

"We're prepared to consider it, publicly, transparently, and here in Russia," he said. "But that absolutely doesn't require any assistance to Cyprus."

Cyprus may force losses of as much as 60 per cent on Bank of Cyprus accounts exceeding the €100,000 insured threshold, according to the central bank in Nicosia.

To secure a €10 billion bailout last month, Cyprus president Nicos Anastasiades agreed to terms including closing Cyprus Popular and putting its deposits above the insured level in a "bad bank".

Mr Shuvalov told reporters last month that Russia may ultimately benefit from Europe's decision to target deposit holders. By setting that precedent, Europe has cast doubt on the reliability of its banks and makes Russia's financial system look comparatively more attractive, he said.

Bloomberg

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
GO BACK
Error Image
The account details entered are not currently associated with an Irish Times subscription. Please subscribe to sign in to comment.
Comment Sign In

Forgot password?
The Irish Times Logo
Thank you
You should receive instructions for resetting your password. When you have reset your password, you can Sign In.
The Irish Times Logo
Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.
Screen Name Selection

Hello

Please choose a screen name. This name will appear beside any comments you post. Your screen name should follow the standards set out in our community standards.

The Irish Times Logo
Commenting on The Irish Times has changed. To comment you must now be an Irish Times subscriber.
SUBSCRIBE
Forgot Password
Please enter your email address so we can send you a link to reset your password.

Sign In

Your Comments
We reserve the right to remove any content at any time from this Community, including without limitation if it violates the Community Standards. We ask that you report content that you in good faith believe violates the above rules by clicking the Flag link next to the offending comment or by filling out this form. New comments are only accepted for 3 days from the date of publication.