NOVOKUZNETSK, April 1 (RIA Novosti) - The Russian government will closely watch the situation around the Russian Commercial Bank, a subsidiary of state-run VTB, when deciding on the forms of its support for Cyprus’s financial system, Prime Minister Dmitry Medvedev’s spokeswoman Natalya Timakova said Monday.
VTB, Russia’s second largest lender by assets, operates in Cyprus through the Russian Commercial Bank, which holds about 2 billion euros ($2.6 billion) worth of its client deposits. According to VTB, the Russian Commercial Bank is Cyprus’s third largest bank by assets, which total 14 billion euros ($18 billion).
Earlier VTB assessed its possible losses in Cyprus in the worst-case scenario at several millions of euros. Russian First Deputy Prime Minister Igor Shuvalov said the Russian Commercial Bank is a bank with no problems, and that the Russian authorities hope it would either not be affected at all or suffer minor losses.
Timakova said Medvedev had a meeting on Saturday with the Russian government’s financial bloc, including the Central Bank head, to discuss restructuring of a loan Russia issued to Cyprus in 2011, as well as measures to protect the Russian Commercial Bank.
President Vladimir Putin’s spokesman said March 25 that Russia would consider restructuring its multibillion euro loan to Cyprus. This came after the island nation secured a eurozone bailout to save its outsized banking sector from collapse. The rescue measures included a levy on uninsured deposits larger than 100,000 euros ($128,000) at Cyprus's second largest lender, the Popular Bank of Cyprus.
Russian banks and companies have favored Cyprus since the 1990s, taking advantage of the nation’s low taxes and easy business regulations. Russian banks held about $12 billion on deposit with Cypriot banks at the end of 2012 while Russian corporate deposits accounted for another $19 billion, according to estimates by the international rating agency Moody’s.