Cyprus developments bear no particular consequences for Russian

Cyprus developments bear no particular consequences for Russian,

top Russian official says

There are no particular consequences to the Russian economy from the situation in Cyprus, as long as the problem does not extend to other Eurozone countries, First Deputy Prime Minister of Russia Igor Shuvalov has said.

He added that the problem in Cyprus has been portrayed disproportionately. “For us there is no Cyprus issue. This is a matter that concerns the EU and the Cypriots” Shuvalov noted.

Eurogroup reached an agreement with Cypriot authorities on March 25th on the key elements necessary for a future macroeconomic adjustment programme of 10 billion euros.

A haircut of around 40% on deposits over 100.000 euro at Cyprus’ largest bank, Bank of Cyprus has been imposed, whereas Cyprus Popular Bank will be resolved in a good and bad bank immediately – with full contribution of equity shareholders, bond holders and uninsured depositors – based on a decision by the Central Bank of Cyprus, using the newly adopted Bank Resolution Framework. CPB deposits of up to 100.000 euro are guaranteed.

Shuvalov said however that if the rest of the Eurozone “gets fever” then the problem for Russia will be big.

According to Russian news agency RIA Novosti, quoting EU sources, Shuvalov also referred to the 2,5 bln euros loan Nicosia secured from Moscow in 2012, noting that Cyprus may start talks with Russia to ease the terms. He added however that this can only happen after the finalization of the Eurozone-IMF assistance to Nicosia.

Excluded from international markets, Cyprus applied in June 2012 for financial assistance, after its two largest banks sought state aid, following massive write downs of their Greek bond holdings amounting to €4.5 billion or 25% of the island`s GDP, as a result of the Greek sovereign debt haircut.