RUSSIANS responded angrily yesterday to the threat of a levy on bank deposits in Cyprus that could end the Mediterranean island’s appeal as a safe haven for their money and cost them billions of euros.
Russians have stashed away huge sums in Cyprus since the Soviet Union collapsed in 1991, making the most of low taxes and light regulation to keep money safe and, in some cases, to launder it.
But Russian banks, firms and individuals will be hit hard if Cyprus imposes the one-off levy on bank deposits as part of a EU bailout, and some started withdrawing money even before the deal was agreed.
“Corporate clients have been calling and emailing asking what is happening and they are quite concerned to say the least, because they need to know what to do," said Thomas Keane of law firm Keane Vgenopoulou & Associates
Keane said that in the past 10 days since rumours surfaced about such a move, Russian depositors had taken around €2bn out of Cyprus.
PROFILE: THE EUROPEAN DEALMAKERS
Russia gave Cyprus a €2.5bn loan in 2011. But while Putin had been believed to be considering easing its terms, Russia is not happy at the savings grab – its citizens are among the largest group of depositors.
Germany is usually behind tough deals on bailouts – it does not want to pay for profligate governments elsewhere. But yesterday Merkel seemed worried, calling for compromise in the interests of Eurozone stability.
ANIBAL CAVACO SILVA
Portugal was bailed out in 2011 and has been making steady progress since. But Cavaco Silva fears the crisis in Cyprus will damage his country, warning the deposit raid is a dangerous precedent to set.