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RF authorities not to save money of russian depositors in Cyprus

April 02, 2013, 10:20 UTC+3
Moscow is ready to take any action only if the state-owned companies and government agencies that have assets in the offshore island are at risk
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Russian First Deputy Prime Minister Igor Shuvalov said that the RF government would not intervene in the situation in Cyprus and save the capital of Russian investors. Moscow is ready to take any action only if the state-owned companies and government agencies that have assets in the offshore island are at risk.

It was not said in what form the select will be saved at government expense and how much it could cost the budget, and therefore taxpayers, the Nezavisimaya Gazeta newspaper writes. The emphasis was placed on the need to discuss and resolve all the issues in Russia, and it is not at all necessary to help Cyprus.

Apparently, the Cyprus subsidiary of the VTB Bank Russian Commercial Bank (RCB) should be put as number one on the list of entities that are to get state aid, according to the newspaper. In term of the size of assets nearly 14 billion euros the RCB is the third largest bank on the island. Its customers are not threatened with the expropriation of their deposits, but the Cypriot authorities, in order to prevent the dramatic capital flight, introduced control over trans-border operations, set the limit on cash withdrawals and credit card spending limit, banned transactions with bank cheques, wire transfers, etc. These are temporary measures, but it is obvious that the RCB problems directly or indirectly tarnish the reputation of VTB  Russia’s largest state-owned bank. According to this logic alone, its Cypriot subsidiary will not be left in trouble.

The situation is more difficult with the money of private businesses and individuals, who over the years took them from Russia to the Cyprus offshore. The accurate statistics is missing.

Among the Russian companies that have shareholders in Cyprus, the press has named OJSC Magnitogorsk Iron and Steel Works (MMK), JSC Holding Company Metalloinvest, JSC Mechel, JSC Evraz Consolidated West Siberian Metallurgical Plant, OJSC NOVATEK, JSC New Forwarding Company (NFC), OJSC Novolipetsk Steel (NLMK), OJSC MMC Norilsk Nickel, JSC Severstal, JSC Siberian Coal Energy Company (SUEK), JSC Tatneft, OJSC Uralkali, JSC IDGC Holding.

Despite the fact that all of them are backbone and township-forming enterprises, they can hardly count on state assistance. Experts say that the resources for the protection of the interests of Russian businesses and individuals that have been trapped by the Cyprus crisis are limited.

Head of the international projects group of the Vegas Lex law firm Yuri Bortnikov suggested that Moscow in negotiations with Nicosia on the restructuring of a 2011 loan (2.5 billion euros for a period of five years) may try to negotiate special conditions for specific companies and investors from Russia. “There is no others leverage,” the lawyer said.

President of Lionstone Investment Services Ltd Alexander Belyakov did not rule out that one way to help the state-owned companies that have been hit by the Cyprus crisis could by the purchase by the state of shares of Cypriot banks, which are offered to the holders of deposits as compensation for losses. “Russia could buy these shares, strengthening its positions of control in Cyprus. I believe that in the current situation where Cyprus has violated many international norms, it is possible to push this matter,” the expert said.

The exact number of Russians who are customers of these banks is unknown as of today, the Novye Izvestia daily writes. According to experts, the number is significant, as well as the sizes of the accounts. Over the past few weeks, while Cyprus was coordinating the plans with European creditors, Russia was reacting very strongly to news from the island, the state television channels devoted special programs to the developments, and the RF prime minister event described the situation there as “plundering loot.” However, now the Russian authorities have abruptly calmed down.

Economists believe that the relative calmness of Moscow could be linked with the fact that in reality the active withdrawal of assets from Cyprus had begun several weeks before the closure of banks and the approval of the bailout plan for the state, the newspaper notes.

 

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