Russian President Vladimir Putin has criticised a levy imposed by the EU on bank deposits in Cyprus as unfair and setting a dangerous precedent.
Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors, and Russian banks are exposed to the island as a favoured offshore centre for big business.
The levy, imposed as part of a e10 billion (R118bn) bailout, sparked panic among Cypriots at the weekend and hit Russian and other European financial markets yesterday.
Russian Deputy Finance Minister Sergei Shatalov said earlier that the tax would be acceptable if it was levied only on interest earned by savers.
There are almost e70bn in deposits held in Cyprus. A little less than half that is held by non-residents, most believed to be Russian.
At the end of last year, Russian banks had about $12bn (R110bn) on deposit with Cypriot banks and corporate deposits accounted for another $19bn, according to Moody’s Investors Service.
That figure is more than twice the size of the bailout, which had been repeatedly delayed amid concerns from other EU states that the close business and banking ties with Russia made Cyprus a conduit for money-laundering.
Officials have also said Russian investors were interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus, the two biggest banks on the Mediterranean island. – Reuters