Putin hits out at 'dangerous' Cyprus bank deposit levy

Putin hits out at 'dangerous' Cyprus bank deposit levy

MOSCOW - Russian President Vladimir Putin criticised on Monday a levy imposed by the European Union on bank deposits in Cyprus as unfair and setting a dangerous precedent.

"While assessing the proposed additional levy on bank accounts in Cyprus, Putin said that such a decision, should it be made, would be unfair, unprofessional and dangerous," Kremlin spokesman Dmitry Peskov told journalists.

Russian citizens account for the majority of the billions of euros held in Cypriot banks by foreign depositors, and Russian banks are heavily exposed to the island as a favoured offshore centre for big business.

The levy, imposed as part of a 10 billion euro bailout, sparked panic among Cypriots over the weekend and hit Russian and other European financial markets on Monday.

As the Cyprus parliament prepares to vote on the measure on Monday, the government in Nicosia was working on a plan to soften the blow for smaller savers.

Russian Deputy Finance Minister Sergei Shatalov earlier said the tax would be acceptable if it was levied only on interest earned by savers.

There are almost 70 billion euros in deposits held in Cyprus. A little less than half that is held by non-residents, most believed to be Russian.

At the end of last year, Russian banks had around US$12 billion on deposits with Cypriot banks and corporate deposits accounted for another $19 billion, according to Moody's credit-rating agency.

That figure is more than twice the size of the bailout, which had been repeatedly delayed amid concerns from other EU states that the close business and banking ties with Russia made Cyprus a conduit for money-laundering.

It ranks as the largest source of foreign direct investment into Russia - money that is largely Russian in origin.

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