Russians might lose up to USD 2bn on Cyprus deposit tax.

By bne IntelliNews March 18, 2013
Russian deposit holders might lose up to USD 2bn out of about USD 20bn worth of deposits on the one-time 10% deposit tax to become effective as of this week in Cyprus, Interfax reports citing Anatoly Aksakov of the Russian association of regional banks. Forbes estimated that deposits of Russian banks and businesses amount from USD 8bn to USD 35bn. It is possible that this week a softer tax or even tax elimination will be negotiated in exchange for financial aid, as Cyprus FinMin is going to visit Russia this week (Russia could refinance a USD 2.5bn loan). Last week Moodys Investors Service issued a special report in which it warned that Russian banks might suffer moderate credit losses if they have material exposures to Cypriot companies of Russian origin or Cypriot banks. Moodys sees Russian banks exposed to risks through loans to Cyprus-based companies of Russian origin, bank and corporate deposits, investments in Cypriot banks, and Russian subsidiaries in Cypriot banks. Moodys estimates that USD30bn-USD 40bn worth of loans were issued to Cyprus-based Russian companies by Russian banks as of end of 2012, accounting for about 15%-20% of the capital base, as well as USD 12bn worth of deposits and investment in Cypriot banks (predominantly Russian banks subsidiaries in Cyprus). Although Moodys base scenario does not include a sovereign default or a moratorium on external payments in Cyrpus this year, the agency believes that the size of the debt burden might compel the authorities to pursue private sector losses as means for debt reduction. This might results in credit risks for Russian banks with links to Cyprus, but not substantial enough to cause negative credit action given the relative size of such exposures, Moodys added.

Related Articles

Russias participation in Cyprus bail-out under question.

As Cyprus is trying to come up with new ways to raise EUR 5.8bn needed to secure the financing from ECB, EC, and IMF, Russia's participation in the package is not clear. According to the latest ... more

Fitch: Russian banks risks in Cyprus limited.

Fitch Ratings believes that resolution of the Cyprus crisis with a deposit levy or some other form of burden sharing involving creditors is unlikely to result in material losses for Russian ... more

Sources: Russia could triple oil exports to China.

Russia and China discuss contracts that would triple exports of Siberian oil through various transport corridors, Reuters reports citing unnamed sources in the industry. Rosneft is discussing ... more

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 335
Dismiss