President Vladimir Putin has instructed his government to negotiate the restructuring of a Russian bailout loan to Cyprus, his spokesman Dmitry Peskov said on Monday.
The announcement signals Moscow’s support for a 10 billion euro ($13 billion) European Union rescue deal struck over the weekend, despite concern that Russian depositors in Cyprus could take losses as a result.
Cyprus had requested an extension of an existing 2.5 billion euro Russian loan, and a reduction in the interest it charges to 2.5 percent from 4.5 percent. Talks last week failed to agree on a restructuring.
Earlier on Monday, Moscow reacted with anger ┬áto the bailout of Cyprus that will result in heavy losses for foreign depositors at the Mediterranean island’s banks, many of which are Russian.
“The stealing of what has already been stolen continues,” Prime Minister Dmitry Medvedev was quoted by news agencies as telling a meeting of government officials.
The weekend rescue deal will inflict heavy losses on uninsured bank deposits in Cyprus over 100,000 euros ($130,000), much of which is money of Russian origin.
Russia turned down desperate appeals for financial aid last week from the Cypriot government and the final bailout was likely to be more painful for its depositors than an initial rescue plan rejected by the Cypriot parliament.
Speaking after the meeting, First Deputy Prime Minister Igor Shuvalov said losses to Russian investors in Cyprus were not yet clear.
He also said that the Cypriot unit of state-controlled VTB , Russian Commercial Bank, would not be affected by measures taken by the government.
“What is happening is a good signal to those who plan to move their capital to … Russian banks,” he was quoted as saying. “We have very stable banks.”
Russians are believed to account for most of the 19 billion euros of non-EU, non-bank money held in Cypriot banks at the last count by the central bank in January. Of 38 billion euros in deposits from banks, 13 billion came from outside the EU. (Reuters)

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