Russians gone before seizure.
"The new, softer line on Cyprus puzzled some experts, who said that Russia easily could have bailed out the island nation, the Christian Science Monitor reported.
But the Kremlin's tacit approval may reflect a realization that Russian business will emerge from the Cyprus fiasco with less damage than previously thought: According to market watchers, the new tax on bank holdings won't impact the country's economy significantly, as sizeable Russian holdings there already have been removed, the BBC Russian Service reported.
The possibility of default in Cyprus has been looming for more than a year, and many Russian businesses registered there were prepared for such a turn of events, said Eduard Savulyak, director of the Moscow office of Tax Consulting UK. A majority of Russian businessmen worked through Cyprus-registered companies but kept their money in banks elsewhere, so the levy doesn't affect them, he added.
"I don't know one millionaire who would keep money in Cyprus," Savulyak said. "As far as private individuals, they have hundreds of thousands in accounts there, but not millions."
Furthermore, Russian oligarchs who still had large deposits in Cyprus likely withdrew most of it last week as Cyprus prepared to stop all unauthorized capital movements. On Monday, Reuters reported a major loophole that large Russian account holders may have used to jump ship while ordinary Cypriots lined up at ATMs to withdraw a few hundred euros: Uniastrum Bank, 80 percent of which is owned by Bank of Cyprus, did not place any restrictions on withdrawals in Russia in the week leading up to the restructuring decision.
Laiki Bank and Bank of Cyprus branches in London did not limit withdrawals that week, either. No one knows exactly how much money has been transferred out of Cyprus, Reuters reported.
Moreover, several solvent commercial banks, including a Cyprus subsidiary of state-controlled Russian bank VTB, will be left mostly unaffected by the restructuring, the Christian Science Monitor reported.
An editorial in the Thursday edition of Vedomosti concluded that the Russian authorities' accepted the Cyprus restructuring after it became apparent that mainly medium-sized businesses would suffer losses, not the large investors that are the Kremlin's first priority.
Now an exodus of all remaining Russian business likely is beginning, some in Cyprus say.
"Knowing the temperament of Russian investors, I'm sure they'll leave," an unnamed Russian businessman living on the island told the BBC Russian Service. "Right away (Russian businessmen) said, 'This is obviously a money grab, this is robbery. Forget Cyprus, there are a lot of other jurisdictions, like Singapore or Dubai.'"
Russian savers in Cyprus reported that funds had been frozen in their accounts already in mid-March, according to the BBC Russian Service.
Besides the imminent seizure of bank deposits, new powers granted to the Cyprus central bank by the restructuring deal have worried Russian investors and businessmen. In particular, the central bank will be able to convert current accounts to time deposits that will then be subject to the bailout levy, which could hurt even those Russian companies that had avoided time deposits, Vedomosti reported.
For those who haven't already taken their money out, the only way to get around the tax is to file a case in the Supreme Court of Cyprus, the BBC Russian Service reported."
