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Russian companies not to leave Cyprus entirely - opinion

March 26, 2013, 23:36 UTC+3
Sofocleous said the share of Russian money in Cyprus is not actually large
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NICOSIA, March 26 (Itar-Tass) – Russian companies registered in Cyprus and doing business outside the island will not be affected particularly by the Cyprus government’s measures for restructuring the leading banks, Chrisis Sofocleous, partner with Andreas Sofocleous law firm, a major law firm in Cyprus, said in an interview with Itar-Tass. He said companies that had made investments in Cyprus and had amassed large funds for operations here would sustain really huge losses.

Sofocleous said the share of Russian money in Cyprus is not actually large. He believes the figure currently mentioned, 18 billion euro, is somewhat exaggerated; it is more probably 13-15 billion euro. A considerable amount of these funds is held in subsidiaries of Russian companies and banks, the jurist said. Even before the Brussel’s decision many realized what turn the events were taking, especially in the Cyprus Popular Bank, and withdrew funds from that bank and from the Bank of Cyprus. Losses will certainly be incurred, but not so large, Sofocleous said. He believes this is one of the reasons why Russia did not try to give financial aid to Cyprus. The share of Russian money in Cyprus is not so large as to intervene and strain relations with the European Union.

Russian companies basing in Cyprus and doing business outside it – international business companies - do not have large funds in Cyprus and will not be particularly affected, Sofocleous noted. He said luckily the Cyprus tax regime does not change drastically; the agreement with Russia on avoiding double taxation remains valid.

For that reason he expressed the hope that Cyprus will remain an international holding center for Russian business. He said nobody, certainly, would deposit their money in Cyprus for some time. But it is not so easy to open a deposit in Europe either. There is rigid control, the jurist said. So he believes it would be an exaggeration to say that the Russians would leave Cyprus. They would look for other banks to carry out operations.

At the same time Sofocleous said that part of the Russian business operating in Cyprus that invested considerable sums and amassed huge funds would sustain sizable losses. He said this is true not only of Russian companies but also of all foreign and Cyprus firms making settlements in Cyprus, including German, British and other European firms. They lose heavily from the banks being closed for a week and a half. The sums of lost opportunities and fines run into billions of euro, the jurist said.


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