Cyprus May Become Europe’s Lehman, Billionaire Potanin SaysIlya Khrennikov and Jake Rudnitsky
Cyprus is undermining trust in European banks and can be likened to Lehman Brothers Inc., whose collapse ignited the 2008 global economic crisis, Russian billionaire Vladimir Potanin said.
“Very serious” levels of capital may be taken out of the island nation, destroying the economy and hurting the European Union, Potanin, chief executive officer of OAO GMK Norilsk Nickel, the world’s biggest producer of the metal, said in Moscow today.
Cyprus is seeking to rescue its economy, the euro region’s third-smallest, after local lawmakers rejected an unprecedented 5.8 billion-euro ($7.5 billion) levy on bank deposits demanded by European finance ministers as a condition for a 10 billion-euro aid package. Cypriot Finance Minister Michael Sarris is in Moscow this week to discuss a bailout with Russia, the nation’s biggest foreign investor.
“The situation in Cyprus kind of reminds me of the situation with Lehman Brothers,” Potanin told reporters in the Russian capital. Lehman, once the world’s fourth-largest investment bank, filed the biggest bankruptcy in U.S. history in September 2008.
“Cyprus just messed up,” he said.
Russia has been offered Cypriot assets, including offshore gas resources, as the country seeks about 5 billion euros of financing, according to three Russian officials, who declined to be identified because negotiations in Moscow are confidential.
Russian companies and individuals have an estimated $31 billion of wealth in Cyprus, according to Moody’s Investors Service. Cyprus Central Bank Governor Panicos Demetriades estimates Russian deposits in the country’s banks amount to as much as 10.2 billion euros, according to an interview published today in Moscow’s Vedomosti newspaper.
“The fact that this issue was discussed in this way is what people will remember,” Potanin said. “Investors remember what can happen to their money in a second, depositors understood what their banks may do when the government needs to cut its budget deficit.”
To continue reading this article you must be a Bloomberg Professional Service Subscriber.
If you believe that you may have received this message in error please let us know.
- Uber Halts Autonomous Car Tests After Fatal Crash in Arizona
- Apple Is Secretly Developing Its Own Screens for the First Time
- Uber Victim Stepped Suddenly in Front of Self-Driving Car
- Stocks Slump as Facebook Hits Tech; Bonds Recover: Markets Wrap
- How Facebook Made Its Cambridge Analytica Data Crisis Even Worse