Reuters: Russia risks billions of dollars if Cyprus defaults

13 March 2013

Moody's credit rating agency said Russian banks and companies exposed to Cyprus risk losing billions of dollars should the island's government default on its debt obligations.

Moody's said there is a high probability of Cyprus defaulting, or at least the authorities being forced by the size of the debt to "pursue every avenue for debt reduction, including private-sector losses on Cypriot debt". Cyprus is a favoured offshore centre for Russian big business, thanks to its low taxes and light regulation. It ranks as the largest source of foreign direct investment into Russia - money that is largely Russian in origin.

Losing the possibility to repatriate the $19 billion - the amount estimated by Moody's in corporate deposits at Cypriot banks - could also affect the servicing of bank debt back in Russia.

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