Moodys: Russian banks could suffer moderate credit losses on Cyprus risks.

By bne IntelliNews March 14, 2013
Moodys Investors Service issues a special report in which it warns 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, however, 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 adds.

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