July 7 2012
MOSCOW: Russia said on Friday it was studying a new five-billion-euro ($6.2-billion) loan request from Cyprus needed to shore up struggling Cypriot banks from financial turmoil rocking nearby Greece.
Finance Minister Anton Siluanov confirmed that the assistance package was separate from one he said the Mediterranean island nation had sought from the European Union in hopes of injecting its financial system with cash.
“We have received the request,” news agencies quoted Siluanov as saying. “The European Union is studying (their request), and we are studying” the other one.
Cyprus has close business relations with Russia and remains one of its largest direct investors because of money placed in its finance houses by various post-Soviet tycoons.
Analysts note a particular interest by Moscow in making sure Cyprus does not fail as that would deprive Russian authorities of cash needed to pursue their stalled efforts to modernise and diversify the economy away from oil exports.
Cyprus has refused to officially estimate how badly its banks have been exposed to bad debts from Greece.
But local media speculate the figure could be close to 10 billion euros - about half of the country’s gross domestic product - and say it is needed quickly to recapitalise leading lenders like Cyprus Popular Bank.
The latest request comes on top of a loan worth 2.5 billion euros that Cyprus secured from Russia after months of protracted negotiations in 2011.
Russia has only payed out one-third of that package and officials seemed hesitant to commit to more money without knowing what other international lenders intended to do.
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