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Putin hits out at “dangerous” Cyprus bank deposit levy

Editor’s note : The European Union (EU) and the International Monetary Fund (IMF) agreed to bail out Cyprus by granting the island nation in the Mediterranean a EUR 10 billion (USD 13 billion) loan. In return, the government of Cyprus had to agree to levy a minimum 6,75 % one-off tax on all deposits at Cypriot banks.

According to several Russian news agencies and media, Russian banks had approximately USD 12 billion deposited in banks on Cyprus while Russian corporations have another USD 19 billion invested in Cypriot banks.
 
This means that the EU and the IMF will get USD $3 Billion from Russian banks and corporations immediately for a USD 13 billion loan to Cyprus.
 
President Vladimir Putin called the imposing a one-off levy on all bank deposits as part of the bailout deal, including the deposits of foreign investors, “unfair, unprofessional and dangerous” and said that it was setting a dangerous precedent.
 

Using the figures given, Russian banks and Russian corporations apparently have USD $31 Billion in Cypriot banks.  $31 Billion X .0675 = USD $2.0925 Billion. In total, Russian banks, corporations and Russian citizens are thought to have just under half of the USD $91 Billion in Cypriot banks, so in addition to the hit Russian banks and corporations would take, Russian citizens could be hit for ~$11 billion X .0675 = USD $742.5 Million which could put the total at approximately USD $2.835 Billion that Russian banks, corporations and citizens will have to pay to the IMF and the EU so that Cyprus can get this USD 13 billion loan.

The Zionists who control the IMF and the ECB ripping the Russian banks and corporations off for USD $2.0925 Billion ?

 

Russia has made no decision yet on whether to extend the duration or ease the terms of a sovereign loan to Cyprus, a government source told Reuters earlier on Monday.

 

By Lidia Kelly and Alexei Anishchuk

Reuters

 

 

MOSCOW (Reuters) – Russian President Vladimir Putin criticized on Monday a levy imposed by the European Union on bank deposits in Cyprus as unfair and setting a dangerous precedent.

“While assessing the proposed additional levy on bank accounts in Cyprus, Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous,” Kremlin spokesman Dmitry Peskov told journalists.

Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors, and Russian banks are heavily exposed to the island as a favored offshore centre for big business.

The levy, imposed as part of a 10 billion euro bailout, sparked panic among Cypriots over the weekend and hit Russian and other European financial markets on Monday.

As the Cyprus parliament prepares to vote on the measure on Monday, the government in Nicosia was working on a plan to soften the blow for smaller savers.

Russian Deputy Finance Minister Sergei Shatalov earlier said the tax would be acceptable if it was levied only on interest earned by savers.

There are almost 70 billion euros in deposits held in Cyprus. A little less than half that is held by non-residents, most believed to be Russian.

At the end of last year, Russian banks had around $12 billion on deposits with Cypriot banks and corporate deposits accounted for another $19 billion, according to Moody’s credit-rating agency.

That figure is more than twice the size of the bailout, which had been repeatedly delayed amid concerns from other EU states that the close business and banking ties with Russia made Cyprus a conduit for money-laundering.

It ranks as the largest source of foreign direct investment into Russia – money that is largely Russian in origin.

NO DECISION ON RUSSIAN LOAN

Russia has made no decision yet on whether to extend the duration or ease the terms of a sovereign loan to Cyprus, a government source told Reuters earlier on Monday.

European Union officials have said they expect Russia to extend the 2.5 billion euro ($3.27 billion) loan by five years, until 2021, and refinance terms.

Cyprus’ Finance Minister Michael Sarris had planned to travel to Moscow on Monday for meetings to try to pin down new loan terms. A second Russian government source said Sarris would now travel on Wednesday.

The levy on savers, meanwhile, should not alter domestic capital flows, the news agency Prime quoted Deputy Economy Minister Andrei Klepach as saying.

Officials have also said Russian investors are interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus – the two biggest banks on the Mediterranean island.

The involvement of any Russian investors – private or state – in recapitalization of the island’s struggling banks is still a matter for discussion, the first government source said.

“There has been no decision yet,” the source said.

($1 = 0.7654 euros)

(Moscow Newsroom; Editing by John Stonestreet)

Relevant information:

Crisis Bailout Backfires: Depositors fear loss of savings in Cyprus debt payoff

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Posted by on Mar 18 2013, With 0 Reads, Filed under Americas, Asia, Bahrain, Big Business, China, Editors' Picks, Egypt, Europe, Global, Investing & Finance, Iran, Israel, Middle East, Oceana, United Kingdom. You can follow any responses to this entry through the RSS 2.0. Both comments and pings are currently closed.
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