March 20, 2013 / 9:03 AM / 5 years ago

Russian financial stocks boosted after Cyprus rejects bank levy

By Sonia Elks
    MOSCOW, Mar 20 - Russian financial firms were the strongest performers on
the Moscow stock market on Wednesday after the rejection by Cypriot lawmakers of
a proposed bank levy boosted hopes for a reduced impact on Russian investors.
    Russian banks, some of which are exposed to Cyprus as a favoured offshore
haven, had led shares in a tumble downwards on Monday and Tuesday on news of the
plan for a one-off levy of up to 10 percent on deposits as part of an EU
bail-out. 
    Around $12 billion was placed in Cyprus by Russian banks, while corporate
deposits amounted to $19 billion at the end of 2012, according to Moody's rating
agency. 
    Russia's No. 2 bank VTB, which is thought to be particularly exposed to
Cyprus, was one of the market's top performers, trading up 1.30 percent, after
spending two days as one of the worst performers, while the financial sector as
a whole was up by 0.64 percent, in contrast to losses elsewhere.
    VTB said on Wednesday if a bank deposit levy is enforced in Cyprus it would
re-examine its business in the country, adding that any loss from its operations
there in a worst-case scenario could be "tens of millions of euros".
 
    At 0735 GMT the rouble-based MICEX was up 0.12 percent at 1,450.93
points, while the dollar-based RTS index was down 0.06 percent at
1,477.88 points.
    Analysts at EnergoCapital investment group suggested that Russian market may
interpret the Cypriot market's rejection on the EU bailout as a positive, and
tipped the financials sector for an upswing.
    "The decision places the country in a position of considerable dependence on
assistance from Russia, which may act as a guarantor of Russian investors'
interests in the Cypriot market," they wrote in a note.
    However, numerous analysts warned that stocks will remain volatile until a
bailout for Cyprus is resolved.
    "The situation will remain fluid until at least the end of the week," said
Chris Weafer, chief strategist at Sberbank Investment Research.
    Russian stocks also saw losses in the metals and mining sector, reflecting
concerns over Eurozone growth, with steel and coal group Mechel 
dropping 1.73 percent and top aluminium producer Rusal down 1.23 percent.
    The rouble climbed, supported by rising prices for oil, Russia's main export
and local end-of-month tax demands. The currency rose 0.18 percent the dollar
 at 30.93, and also rose by 0.15 percent against a weaker euro
 at 39.90. 
 Russian                         Latest      Net       %    % Change
 Markets                                  Change  Change     on year
 STOCKS                                                             
 MICEX                          1450.93     1.73    0.12       3.47 
 RTS                            1477.88    -0.94   -0.06       6.95 
 London ADRs                     851.63   -11.88   -1.38      -3.60 
 Emrg Mkt                       1025.98     1.02    0.10      -2.77 
 Indx                                                     
 MSCI Russia                     789.44     0.21    0.03      -2.24 
 Sberbank                        100.34     0.62    0.62       7.96 
 VTB                               0.05     0.00    1.30      -2.69 
 Gazprom                         141.72    -0.62   -0.44      -1.38 
 LUKOIL                         1943.00     3.80    0.20      -2.86 
 Rostelecom                      116.54     1.50    1.30      -3.21 
 Dollar/Roub                      30.93    -0.06   -0.18       1.71 
 le                                                       
 Euro/Rouble                      39.90    -0.06   -0.15      -0.90 
 Rouble                           34.96    -0.06   -0.17       0.35 
 basket                                                   
 DEBT                               Bid      Ask    %Rtn      Coupon
 Russia                            6.93     6.90   -0.03        7.60
 10-yr bond                                               
 MONEY                              Bid      Ask   Close            
 MARKET                                                   
 Overnight                         5.65     6.15    5.75            
 rate                                                     
 All data taken from Reuters at 0735 GMT

 (Compiled by Sonia Elks)

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