* Russian president calls levy "unfair, unprofessional"
* Russia says EU decided without consulting Moscow, may
* Russia has close financial ties to Cyprus
By Lidia Kelly and Alexei Anishchuk
MOSCOW, March 18 A lack of coordination with
Russia in future on Cyprus could affect a decision by Moscow on
restructuring its 2.5 billion euro ($3.3 billion) loan to the
island, the Russian finance minister said on Monday.
Russian President Vladimir Putin branded as "dangerous" a
weekend decision by the European Union to impose a levy on
Cypriot bank accounts as part of a 10 billion euro bailout.
The EU agreed the move without involving Russia which has
strong financial ties with the country.
Russians account for much of the billions of euros held in
Cypriot banks by foreign depositors and its banks are heavily
exposed to the island.
As part of a package of support for Cyprus, EU officials
expect Russia to extend its existing loan by five years and
But Moscow was frustrated that it was not consulted on the
"We had an agreement with colleagues from the euro zone that
we'd coordinate our actions (on Cyprus)," Finance Minister Anton
Siluanov told Reuters.
"So, we will consider the issue of restructuring of the loan
taking into account our (future) participation in the
coordinated actions with the European Union to help Cyprus."
With a vote by the Cyprus parliament on the measure now
delayed until Tuesday, the government in Nicosia was working on
a plan to soften the blow for smaller savers.
There are almost 70 billion euros in deposits held in
Cyprus. A little less than half that is held by non-residents,
most believed to be Russian, prompting the strong comments from
"While assessing the proposed additional levy on bank
accounts in Cyprus, (President) Putin said that such a decision,
should it be made, would be unfair, unprofessional and
dangerous," Kremlin spokesman Dmitry Peskov told journalists.
Putin called a special Kremlin meeting on Monday to discuss
Cyprus' Finance Minister Michael Sarris will visit Moscow on
Wednesday for meetings to try to pin down new loan terms, a
government Russian government source said.
Officials have also said Russian investors are interested in
buying a majority stake in Cyprus Popular Bank and
increasing their holdings in Bank of Cyprus - the two
biggest banks on the Mediterranean island.
Cyprus is a favoured offshore centre for Russian big
business, thanks to its low taxes and light regulation. It ranks
as the largest source of foreign direct investment into Russia -
money that is largely Russian in origin.
Prime Minister Dmitry Medvedev said the euro zone decision
seemed to be aimed at confiscating someone else's property.
"This practice, unfortunately, was well known and familiar
in the Soviet period," Medvedev was quoted as saying by Russian
Although Russia has never imposed an official levy on
deposits in the post-Soviet history, during its 1998 crisis it
had imposed a moratorium on exchanging hard currency bank
deposits, which hit bank deposits hard.
At the end of last year, Russian banks had around $12
billion on deposits with Cypriot banks and corporate deposits
accounted for another $19 billion, according to Moody's
That figure is more than twice the size of the bailout,
which had been repeatedly delayed amid concerns from other EU
states that the close business and banking ties with Russia made
Cyprus a conduit for money-laundering.
Most of Russia's largest banks have some credit exposure to
Cyprus. VTB, Russia's second-largest bank by assets,
had $13.8 billion in assets and $374 million through its Cypriot
subsidiary, Russian Commercial Bank, at the end of 2011.
A trader in a large foreign bank operating in Russia said
VTB's Cyprus deposits amount to several billions through its
Cyprus subsidiary RCB.
"Assuming $3 billion in deposits and 8 percent tax hit,
VTB's clients would lose around $240 million, but no exposure to
the bank itself," the trader said.