Fitch: Russian banks risks in Cyprus limited.

By bne IntelliNews March 22, 2013
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 banks, with the risks of the levy appearing to be receding despite the uncertain situation. Fitchs base case scenario is that banks customers will suffer most of the losses if a one-time deposit tax is imposed, although some banks might choose to absorb some of these losses. Agency sees these potential losses as small relative to the equity of the banks affected. Russian banks might face more significant operational risks in case of a prolonged crisis. Should brokerage and trading counterpart become reluctant to trade with Cyprus-based entities, restructuring of trading/brokerage businesses will be required, however, unlikely to have substantial impact on banks affected. Based on the statements of Russian state-owned banks Fitch views takeover of troubled Cypriot banks by any of them as unlikely. To remind, Moodys also sees Russian banks exposures 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 as not substantial enough to cause negative credit action given the relative size of such exposures.

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