BBC: Russian money in Cyprus: Why is there so much?
One of the interesting aspects to emerge from the Cyprus bailout is the close financial relationship between Cyprus and Russia - and in particular the large amount of Russian money invested in the eurozone's smallest economy.
It is estimated that about one half to a third of all Cyprus bank deposits are of Russian origin. The ratings agency Moody's estimates that there is about $31bn (£21bn) of Russian money in Cypriot bank accounts - $12bn from banks and $19bn from businesses and individuals.
A leaked report from the German foreign intelligence service, quoted by Der Spiegel, suggested that the main beneficiaries from a eurozone bailout of Cyprus would be Russian oligarchs, businessmen and mafiosi. And that is believed to be one of the main reasons why savers with money in Cyprus are being forced to contribute to the bank bailout - an unprecedented event.
The close financial relationship between the two countries is said to date back to the early 1990s and the breakup of the Soviet Union when newly-rich oligarchs were looking for places to put their cash.
http://www.bbc.co.uk/news/business-21831943
Russia condemns 'unfair' Cyprus bank levy as bailout fears grow
Vladimir Putin. Russia's stock markets tumbled amid growing concerns over the Cyprus bailout.
Vladimir Putin, Russia's president, said the measure would be "unfair, unprofessional and dangerous". His prime minister, Dmitry Medvedev, said the move "was just like a confiscation of someone else's money". He warned Russia would have to "correct" its relationship with Cyprus if the measure were passed.
The controversial levy, which would institute a charge of 9.9% on those holding more than €100,000 in Cyprus banks, is believed to have been designed to address EU concerns over using taxpayers' money to rescue a banking system heavily reliant on questionable Russian deposits. A plan to levy a 6.75% charge on those holding less than €100,000 is reportedly being negotiated downward.
News of the levy, announced at the weekend, caught Russia by surprise. The country's finance minister, Anton Siluanov, said Europe's failure to consult with Russia could affect its decision on restructuring and extending a €2.5bn loan issued to Cyprus last year.
Russian oligarchs stepped in to condemn the move. Writing in the Kommersant daily newspaper, Mikhail Prokhorov, a metals magnate turned politician, warned that Europe "has opened a Pandora's box, creating a dangerous precedent in deciding the problem of the capitalisation of the banking system in problem countries". Oligarch Alexander Lebedev, owner of the Independent and Evening Standard newspapers in London, also expressed concerns, telling Kommersant: "For Russia, Cyprus was also a transit point for criminal money leaving the country."
http://www.guardian.co.uk/world/2013/mar/18/russia-unfair-cyprus-bank-levy
Seems that most of the push back on forcing those with large account balances being forced to shoulder the costs of this bank rescue is coming from Russia and a few other sources. It still seems to be a fairer solution than a tax payer bailout or penalizing those with smaller account balances. In any case, the banking sector there is going to have to be regulated more tightly and reduced in size relative to the economy as happened after similar crises in Iceland and Ireland.
= new reply since forum marked as read
