MOSCOW, March 20 (Reuters) - Russian bank VTB it would re-examine its business in Cyprus if a bank deposit levy is enforced, adding any loss from its operations there could in a worst-case scenario reach “tens of millions of euros”.
The levy was proposed as a condition for a European bailout, although this was rejected by Cyprus’s parliament on Tuesday. Russia has a high level of deposits in Cyprus banks.
The proposed levy drew an angry reaction from Russia and President Vladimir Putin on Monday called it “unfair, unprofessional and dangerous.”
In remarks which echoed Putin’s comments, VTB said the levy was ”unprofessional, dangerous and could threaten the financial stability of the European and the global economy.
“If this proposal is accepted, VTB would be forced to re-examine its business development strategy in Cyprus,” the bank said.
VTB companies’ deposits and current accounts at its Cyprus subsidiary Russian Commercial Bank (RCB) and other Cypriot banks amount to around 50 million euros ($64.4 million), a source at the bank said, adding that RCB’s financial results account for around 3 percent of the group’s consolidated net profit.
The source said VTB does not expect the situation in Cyprus to have any material impact on the performance of RCB and VTB Group. RCB’s total client deposits amount to less than 2 billion euros, which is less than 2 percent of the group’s total deposits, it said.
“Even in the worst case scenario, losses to the bank would be tens of millions of euros and not more,” VTB said.