Russian lenders including VTB Group (VTBR) face “limited” risks as Cypriot authorities struggle to save the Mediterranean island’s banking system, Fitch Ratings said.
The likelihood of a customer-deposit tax is “receding,” and another “burden sharing” measure involving creditors of Cypriot banks probably won’t lead to “material losses” for Russian lenders, Fitch said in a statement today.
In the event that Russian lenders choose to absorb some losses for clients, any shortfall would be “small relative to the equity of the banks,” Fitch said. “Unless interbank deposits are subject to a levy, we believe risks from placements of Russian banks in Cypriot banks are limited.”
VTB, Russia’s second-largest bank, said on March 20 it will “re-examine” its business in Cyprus if a tax on deposits is introduced even though it may lose “only tens of millions of euros.” The company operates Russian Commercial Bank Cyprus with about 14 billion euros ($18 billion) of assets, Fitch estimated.
To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at email@example.com