News / Economy

Russia Won't Help Cyprus Depositors, says Minister

A man walks past a branch of Bank of Cyprus in Nicosia, March 31, 2013.
A man walks past a branch of Bank of Cyprus in Nicosia, March 31, 2013.
Reuters
The Russian government will not aid businesses that have lost money in Cyprus, First Deputy Prime Minister Igor Shuvalov said, underscoring Moscow's resolve to clamp down on the flight of capital to offshore financial centers.

Major account holders, many of them Russian, will lose up to 60 percent of their deposits over 100,000 euros ($128,400) at Cyprus's largest bank under a European Union bailout to save the Mediterranean island from bankrutpcy.

If Russians lose money "it's a terrible shame, but the Russian government will not take any action in such a situation," Shuvalov was quoted by the Interfax news agency as saying in a television interview on Sunday night.

But if a large company, in which the Russian state was a shareholder, sustained serious losses then this could be reviewed on a case-by-case basis, Shuvalov added.

FILE - First Deputy Prime Minister Igor Shuvalov in St. Petersburg, June 22, 2012.FILE - First Deputy Prime Minister Igor Shuvalov in St. Petersburg, June 22, 2012.
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FILE - First Deputy Prime Minister Igor Shuvalov in St. Petersburg, June 22, 2012.
FILE - First Deputy Prime Minister Igor Shuvalov in St. Petersburg, June 22, 2012.
"If there is some kind of concrete situation, we would be willing to examine it - publicly, transparently, here in Russia, but for this it would not be necessary to assist Cyprus," he said.

Cyprus is a staging post for large-scale capital flows in and out of Russia - including around a quarter of foreign direct investment flows and foreign lending, according to investment bank Morgan Stanley.

Much of that money is taking advantage of favorable tax treatment, but some is seeking to evade the Russian tax authorities, Shuvalov said.

Russians were believed to account for most of the 19 billion euros of non-EU, non-bank money held in Cypriot banks in January, according to the island's central bank. Of 38 billion euros in deposits from banks, 13 billion euros came from outside the EU.

($1 = 0.7788 euros)

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Comments
     
by: Gennady from: Russia, Volga Region
April 01, 2013 9:37 PM
It’s fresh in memory when Mr Putin was furious at Cyprus decision on large deposits. So the flight of Russian capital to an EU member wasn’t a problem for him. I would view Mr Shuvalov’s announcement, one of a dozen richest men in Russia, with “a pinch of salt”, as an Aesop’s saying. It’s more important what he hadn’t mention, that Russia can't afford any help: empty state budget with unpopular economic climate, Russian foreign currency reserve dropped down to 450 bln $. His words of “"If there is some kind of concrete situation, we would be willing to examine it - publicly, transparently, here in Russia…(to assist) ” imply many loopholes to all friendly to the Kremlin nouveau riche.

In Response

by: Worry01 from: U.S.
April 02, 2013 1:41 AM
People who have no faith in their own economies park their assets abroad. It is not simply a matter of tax avoidance in many cases. People do learn from what happened to others who blindly kept everything in a domestic bank.

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