Russian anger at Cyprus bailout levy
- 18 March 2013
- From the section Europe
Russian Prime Minister Dmitry Medvedev has said a levy that bank account holders in Cyprus must pay as part of bailout deal looks like "confiscation".
Russian President Vladimir Putin called it "unfair, unprofessional and dangerous", while the finance minister said Russia may reconsider the terms of a 2.5bn euro loan (£2.1bn) to Cyprus.
Russians are believed to hold some 20bn euros of deposits in Cypriot banks.
The terms of the EU and IMF bailout have caused widespread anger in Cyprus.
President Nicos Anastasiades has indicated he wants the terms of the 10bn-euro ($13bn; £8.6bn) bailout amended, while a parliamentary vote on the bailout has been delayed until Tuesday.
Under the currently agreed terms, depositors with less than 100,000 euros in Cyprus accounts would have to pay a one-time tax of 6.75%. Those with sums over that threshold would pay 9.9%.
Depositors will be compensated with the equivalent amount in shares in their banks, and Mr Anastasiades promised that those who kept deposits in Cypriot banks for the next two years would be given bonds linked to revenues from natural gas.
Moody's ratings agency estimates that, at the end of 2012, Russian banks had placed $12bn (£8bn) in Cypriot banks, with corporate deposits at $19bn. So Russian corporate and individual investors could lose up to $2bn.
"This simply looks like confiscating money that doesn't belong to you," Mr Medvedev said on Monday.
"This practice was unfortunately quite well known and familiar from the Soviet period, when money was exchanged at certain ratios or not returned," Mr Medvedev said.
"But here we are talking about a country that's supposed to be a market economy and an EU member."
He added that Russia would have to "make some adjustments to [its] position" in Cyprus, without elaborating.
The Russian government gave Cyprus a 2.5bn euro loan in 2011.
Russian Finance Minister Anton Siluanov told the Interfax news agency on Monday that the levy targeting private depositors was "unfair".
"The actions of the Eurogroup as regards introducing a levy on bank deposits was taken without discussion with Russia, so we will additionally consider our involvement in restructuring a loan issued earlier," he was quoted as saying by Russia's Interfax news agency.
Meanwhile, Russian oil and gas giant Gazprom denied reports that it had offered financial aid to Cyprus's banks in return for licences to extract natural gas.
Cyprus announced the discovery of a field containing between 5 and 8 trillion cubic feet of natural gas under the Mediterranean Sea in 2011 but Turkey disputes its drilling rights.
People commenting on BBC Russian's social media pages referred to suspicions that some of the money deposited by Russians in Cypriot banks was from illicit gains.
One contribution on BBC Russian's Facebook page from Aleksei Konopliov said: "The president of Cyprus couldn't think of anything better than to promise the account holders bank shares as compensation for the tax. Suddenly all banks in Cyprus are about to become Russian!"