Cyprus Mail

‘Russia leaned on Cypriot MPs to nix across-the-board haircut’

By Staff Reporter

DURING the heady days of March 2013, the Russian government had leaned on Cypriot MPs to throw out a proposal for a levy on all deposits across banks in Cyprus, including Russian Commercial Bank (RCB).

The bombshell revelation was made by DIKO MP Marios Garoyian. Speaking on a local radio show on Wednesday, Garoyian – who was DIKO leader at the time in question – said Moscow had warned lawmakers not to vote for the proposal.

He was being asked by the show’s host why he had voted against a levy on all deposits at all banks.

“Moscow had conveyed a clear message that if deposits at RCB were affected, we [Cyprus] would witness a reaction never seen before,” the politician said.

“There is a parameter which many people don’t take into account: that the first bill talked about a flat levy on deposits, and as such it would have impacted RCB, in which the Russian state had interests.”

Asked how, in his view, Moscow might have retaliated, Garoyian said: “People in the know understand. It was an unmistakable message to all of us,” he said.

“Therefore one has to weigh what it would have meant for Cyprus at that difficult time to jeopardise its relations with Russia, a nation which supported us when other so-called allies had abandoned us.”

“As such,” he added, “my choice was based on a conscious decision as I did not wish to put at risk our relations with Russia.

Garoyian declined to go into detail, except to say that “Moscow’s message, though conveyed in a very discreet way, was unmistakable.”

By contrast, he said, Moscow displayed little interest in safeguarding Russians’ deposits with other Cypriot banks – evidently alluding to Laiki and Bank of Cyprus.

As reported by Russia Today in July 2013, about 50 per cent of deposits at Bank of Cyprus belonged to non-EU residents, and much of the funds were suspected to belong to Russian oligarchs.

In March last year, the Eurogroup came up with Plan A, a levy of 6.75 per cent on deposits of less than €100,000 and 9.9 per cent above that, across all banks operating in Cyprus.

After two long weeks of bank ‘holidays’ and intense negotiations, the plan switched to the dissolution of Laiki and a haircut on all deposits above €100,000 at Bank of Cyprus.

On March 19, 2013, parliament had rejected the first plan almost unanimously, only to approve a €10bn bailout deal for Cyprus just days later, which among others provided for the wiping out of depositors at Laiki and a 47.5 per cent haircut on secured deposits at Bank of Cyprus.

In between, the Russian government had rebuffed a request from Cyprus for an extension on a €2.5bn loan.


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