Russia Has Decided Not to Bailout Cyprus Savers Facing Deposit Losses

The First Deputy Prime Minister of Russia, Igor Shuvalov stated that Russia will not be bailing out companies or people who stand to lose money at the two largest banks of Cyprus. Shuvalov stated if a company or person loses money in any of the two banks, that’s a sad thing. Still, the Government does not have any plans as of now to do anything on this matter.

Russia previously turned down the requests of Cyprus for some additional financial assistance. Incidentally, the President of Russia, Vladimir Putin ordered the Russian Government to start talks with the cash strapped island country for restructuring the 2.5 billion Euro loans which were granted in 2011.

The Russian Government has bristled at suggestions that it was responsible for bailing out of Cyprus as various politicians of the European countries alleged that Cyprus used to launder the illegal money of Russia. Shuvalov, referring to such remarks, stated that not all the funds held by Russians in the Cyprus banks are illegal. Shuvalov added that money on which taxes were paid and not paid – both are there in Cypriot banks and it was entirely decision of those individuals or people to keep their money in those banks and the Government hardly has anything to do with it.

According to the spokeswoman of the Russian Prime Minister Dmitry Medvedev, Natalya Timakova, the Government is closely following the situation around Russian Commercial Bank. Incidentally, Russian Commercial Bank is a Cypriot unit of the state run lender VTB Group. An exception can be made in case of Russian Commercial Bank and further support may actually be offered. Timakova added that Medvedev has already sat with the Central Bank chairman Sergey Ignatiev and other Senior Ministers to discuss restructuring the loan, apart from measurements for protecting interests of Russian Commercial Bank and the other Russian companies which conduct financial operations through the same.

As far as a report of Moody’s Investors Service coming out on 13th March is concerned, the Moscow based VTB Group has total of $13.8 billion of assets in Russia. A statement was released by VTB Group on its official website on 20th March and according to the same, VTB will lose only tens of millions of Euros in Cyprus, as the subsidiary contributes to only 3% of the total profit of the lender.