* VTB is the Russian bank most exposed to Cyprus
* Says losses, if any, will be only tens of mlns of euros
* Fitch says risks to Russian banks likely to be limited
MOSCOW, March 21 Russia's VTB said it
did not want to buy banking assets in Cyprus, as talks continue
on whether Russia can help the island, whose financial system
may collapse if it does not get an international bailout.
Cypriot Finance Minister Michael Sarris was in Moscow for a
second day to seek investments in Cyprus' banks and energy
resources to reduce its debt burden, as well as an extension to
an existing Russian bailout loan.
The European Union has given Cyprus till Monday to raise
billions of euros for an international bailout or face the
collapse of its financial system and likely euro exit.
Asked if VTB, Russia's No. 2 bank, was interested in buying
banking assets in Cyprus, where it operates via subsidiary
Russian Commercial Bank, chief executive Andrei Kostin said:
"Two big banks there are in a very hard situation. They need
significant investments in the form of a bailout. So it's
meaningless to speak in any way about us being interested."
Kostin told reporters VTB may revise its strategy regarding
Cyprus operations or even shut down its operations on the island
if a levy, or similar charge, was imposed.
Cypriot banks have been shut since last weekend, after the
European Union proposed a tax on banking deposits as a
requirement for a 10 billion euros ($12.95 billion) bailout.
Officials have said Russian investors are interested in
buying control of Cyprus Popular Bank and increasing
their holdings in Bank of Cyprus - the two biggest
banks on the Mediterranean island.
The Cypriot government denied on Wednesday that it had
struck a deal to sell Cyprus Popular Bank to Russian investors.
Ratings agency Fitch said the deposit levy or "some form of
burden-sharing involving creditors of troubled banks would be
unlikely to result in material losses for Russian banks."
The statement echoed comments from the Russian central bank,
which does not expect the Russian banking system to be
threatened by the proposed deposit levy.
Russian banks had $30 to $40 billion tied up in cross-border
loans to Cypriot firms at the end of 2012 and some $12 billion
on deposit with Cypriot banks, Moody's said earlier.
VTB had $13.8 billion in assets and $374 million in equity
through its Cypriot subsidiary, Russian Commercial Bank, at the
end of 2011, according to Moody's.
VTB has said losses from its Cyprus operations may in a
worst-case scenario reach "tens of millions of euros".
Fitch said on Thursday that banks' customers would suffer
most if a levy was imposed, while banks could take some hit if
they advised their clients to place money with the island.
"However, Fitch would expect any such losses to be small
relative to the equity of the banks affected," it said.
It is unclear when Cypriot banks will reopen. Fitch said
Russian banks could face significant operational risks only if
the crisis was prolonged and brokers and became reluctant to
trade with Cyprus-based counterparts.
"However, we would not expect the costs of any required
restructuring of trading/brokerage businesses to have a
substantial impact on the overall performance of any banks
affected," the agency said.
Russian banks' capital adequacy ratio, a liquidity cushion
essential to absorb possible shocks, was 13.6 percent on Feb. 1,
above the 10 percent the central bank requires.
Fitch also views a takeover of the troubled Cypriot banks by
Russian state-owned banks as "unlikely", it said.