CYPRUS EDITORIAL: Not all Russians are crooks, but maybe banks are

4 mins read


There is a worrying trend of carelessness in the banking sector, with stakeholders sticking their heads in the sand unaware that the drop in deposits held by Russians is just the tip of the iceberg and could grow to become a major problem.

The end of 2018 saw third-country national deposits shrink by EUR 1.4 bln mainly due to Russian and Ukrainian citizens withdrawing their cash from Cyprus banks, while the 7-year rate saw these deposits diminish by EUR 14.51 bln.

There was also a minor drop in deposits of EU nationals in the past year, mainly from Greece, which means that those who supported our banking system by adding liquidity soon after the 2012 meltdown have now opted for other, better shores.


Unfortunately, in Cyprus, instead of fixing problems, we prefer to sweep them under the carpet, hoping that everything ugly will magically go away.

And this is the illusion we have that by “punishing” the dodgy Russian depositors and removing them from our balance sheets, then our banking system will oh, so magically get a clean bill of health from our European and cross-Atlantic partners. 

The irony is that the bulk of the Russian dirty money has never reached the Cyprus laundry system, as these were comfortably deposited in banks on the European continent, no thanks to Cypriot lawyers and accountants, but beyond our shores, nevertheless.


Instead of encouraging the “legit” depositors to prefer Cyprus, there is a disturbing situation where Russian passport-holders are told that they cannot open accounts in our banks and shown the door, using the default excuse that “this is required by the European Union”, the oft-employed cliché when local staff do not have a clue on how to go about their daily duties.


Although senior managers might disagree with this attitude, arguing that “good” Russian customers are most welcome, nonetheless there is a serious communication problem, especially in the Bank of Cyprus, where the local branch officer insists on a completely different interpretation of the regulation than the International Banking Unit, better known in the 1990s as the “OBUs”, from the Offshore Banking Unit.

But this reckless attitude is not limited to just the BOC and not only for Russian customers, either, as European nationals seeking to do business in Cyprus (setting up a company, a property transaction, or other investment) also face frustration from bank staff, with the latter forgetting so quickly how their jobs were at risk when the entire economy was collapsing in 2012.

If the banks and their managers won’t do anything about it, perhaps their Association of Cyprus Banks ought to change its philosophy of a defensive association and become a pro-active body, looking after the interests of all present and future customers and depositors.

Or else, it’s back to stashing the cash under the mattress again.