Will Russia Kill The Cyprus Bailout?

Tyler Durden's picture


While hope appears to still be alive that the Cypriot government will hand over their natural resources to wealthy Russia (or Gazpromia) and all depositors (Russians and Cypriots alike will be saved), we suspect there is a much bigger threat from Russia that has not been discussed. As Monument Securities' Marc Ostwald notes "there's a 50/50 chance Cypriot bailout fails because of the 'massive danger' a large amount of Russian cash flees Cyprus following deposit tax plans." Russia has ~$60 billion exposure to Cyprus, including loans to companies registered in the country and after the haircut 90% of Russian deposits will still be free to leave the country if the levy is approved.

The critical point is that, should this occur (such a large outflow of Russian cash - dwarfing in fact the size of the bailout package itself) it is hard to see how the Cypriot banking system could survive (even with the assistance of the ECB's ELA). Russia's Finance Minister Siluanov expressed disappointment that Russia was not involved in the deal and it is clear that should those outflows leave Cyprus, they are unlikely to end up in other European nation banks.

It seems the pre-emptive contagion and anxiety of this 'levy' have only just begun.

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Mon, 03/18/2013 - 08:52 | 3341860 Chuck Bone
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"...and it is clear that should those outflows leave Cyprus, they are unlikely to end up in other European nation banks."

There's always Switzerland.

Mon, 03/18/2013 - 08:56 | 3341880 maxmad
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who would have thunk WW3 would start over Cyprus?  oh well.....

Mon, 03/18/2013 - 09:14 | 3341964 Thomas
Thomas's picture

Yeah. It's not like somebody shot an arch duke or something.

Mon, 03/18/2013 - 09:15 | 3341969 SWRichmond
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Imagine the fun if the Russian depositors took their Cyprus cash and bought gold...

Mon, 03/18/2013 - 09:20 | 3341999 Careless Whisper
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UFC 159: IMF Mafia Welterwieght Chrissy Diaz-Lagarde v. Russian Mafia Welterwieght Vlad St-Putin


Mon, 03/18/2013 - 09:42 | 3342075 inevitablecollapse
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i'd put my hard earned fiat on putin (not that it's worth much anyways) - i mean for crissakes the guy wrestles bears for fun!

Mon, 03/18/2013 - 10:03 | 3342185 Chupacabra-322
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that doesn't change the fact of the Russian Mafia doesn't like being stolen from much less following any NWO Banksters for that matter.

I might add on the Western Front the Global Criminal Cabal (Intelligence/Bankster) Crime Syndicate are about to John Corzine the whole world. Cornzine was just the warm up just to see how much the Criminals could get away with.   

Could this be the future as to why FBI and other alphabet agencies want access to every ones bank account here in Amerika?

A case, forget which one has already been ruled in US Courts about raiding Customer's Segregated Accounts under the guise of wide spread durress.

Mon, 03/18/2013 - 10:42 | 3342358 Texas Ginslinger
Texas Ginslinger's picture

With the IMF & EU powers forcing the Cyprus tax haven bank account holders (mostly Russian money) to pay the bill  today, it will be interesting to see how the Russian natural gas suppliers squeeze the EU in retaliation.

The EU may have just made a huge mistake.

You don't bite the hand that feeds you gas...

Mon, 03/18/2013 - 11:02 | 3342471 HoofHearted
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Unintended consequences, bitchez.

"Nobody could have seen this coming....nobody..."

Mon, 03/18/2013 - 11:30 | 3342667 rqb1
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They know exactly what they are doing.

Mon, 03/18/2013 - 10:09 | 3342213 Lmo Mutton
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Spank the bitch.

Mon, 03/18/2013 - 09:19 | 3341994 freewolf7
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Cyprus has her black swan suit on, smiling back at us.

Mon, 03/18/2013 - 09:00 | 3341890 swissaustrian
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or the City of London, or Dubai, or Miami, or the Vatican.

The battle for market share in money laundering is on. Trustees and banksters are ready for the Russians all over the world.

Mon, 03/18/2013 - 09:08 | 3341938 francis_sawyer
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Wells Fargo needs to pad its resume...

Mon, 03/18/2013 - 09:02 | 3341908 insanelysane
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except Swiss bankers have started ratting out their depositors.  There is definitely opportunity out there in this market segment.  I am sure Goldman and JPM have something set up somewhere in the world.

Mon, 03/18/2013 - 09:14 | 3341953 BLOTTO
BLOTTO's picture

Something special about the island of Cyprus that maybe we dont know about exactly?


Geographically, its a strategic location in the middle east.


Its been occupied by several major powers during its ancient history...Egyptians, Assyrians, Persians, Romans and Ottoman Empire...


Mon, 03/18/2013 - 10:00 | 3342173 LawsofPhysics
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Not quite; Cyprus is to Russia as the Bahamas are to the U.S.

Mon, 03/18/2013 - 14:37 | 3343581 Lost Word
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And Cyprus was occupied at one time by the Templars, the first major international banking org.

Mon, 03/18/2013 - 09:50 | 3342116 Telemakhos
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No, but Latvia is the new Cyprus.  JPM and Goldman have branches (where don't they?), but I doubt they'll see the bulk of the Russian money; it'll disappear untraceably into very opaque, very local institutions.

Mon, 03/18/2013 - 09:08 | 3341940 EclecticParrot
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I agree that a Swiss haven may be yesterday's strategy.  Instead, expect a lot of post-haircut funds to be directed to struggling NBA franchises, such as rescuing the Kings for CA and moving them to a new Stadium/Winery combo in the Russian River Valley.

Mon, 03/18/2013 - 09:17 | 3341978 swissaustrian
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Soccer clubs are great vehicles, too.

Portugese and Spanish clubs are used for South American drug money laundering.

German, English and Swiss clubs are the Russian and central Asian favorites.

The Russian league itself is the outflow mechanism. That's why their clubs are buying so many overpriced South American players.

Mon, 03/18/2013 - 15:47 | 3344053 Mountainview
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Do you really believe, Russian have their money in Cypriot savings accounts...I suppose They use Cyprus as an intermediary platform, where probabely informed on the issue before all the others...and have moved on to circumvent the EU measures..

Mon, 03/18/2013 - 08:52 | 3341862 MsCreant
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At least their dictator has some balls. 

Mon, 03/18/2013 - 09:02 | 3341907 HD
Mon, 03/18/2013 - 08:54 | 3341870 bank guy in Brussels
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Indeed the best solution is suggested above

Cyprus dumps the euro, leaves the EU and aligns with Russia

What the EU itself should be doing if it had a brain ... Hello, Moscow, Good riddance to the USA and Nato

Mon, 03/18/2013 - 08:54 | 3341871 SeverinSlade
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Russian oligarchs no happy.

Mon, 03/18/2013 - 09:03 | 3341912 swissaustrian
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The Eurocrats don't want the dominoe effect of one country leaving. The Cyprian government should call their bluff.

Mon, 03/18/2013 - 14:43 | 3343629 Lost Word
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Russia and the West are two sides of the same NWO, only a contest to see which side becomes the leader of the NWO.

Mon, 03/18/2013 - 09:09 | 3341944 lotusblue
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Bank guy in Brussels,

              don't you think this case of,"the devil you know is better than the devil you don't" ? Granted,Soviet/communist era is way past but Putin surely will be tempted to use the 50-60 bil in Cyprus to bolster himself politically and as personel piggy-bank.

Mon, 03/18/2013 - 09:15 | 3341967 BurningFuld
BurningFuld's picture

You are right about the Devil you know. Because you already know the USA is 100% corrupt. What if Russia was only 90% corrupt? You would have no idea what they would do next...what if they actually helped out their citizens?  You just can't have an unknown like that hanging over your head.

Mon, 03/18/2013 - 09:11 | 3341948 francis_sawyer
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It's like playing Tropico... YOU RULE bitchez!



Mon, 03/18/2013 - 12:24 | 3342947 Panafrican Funk...
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Tropico was a close second to Sid Meier's Pirates! for me, I guess ultimately I rather be the guy stealing from the rich than the other way around.

Mon, 03/18/2013 - 09:23 | 3341957 Ghordius
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"Cyprus dumps the euro, leaves the EU and aligns with Russia" - have you asked the Cypriots if they want this?

I get it, you do have a little problem with the American Empire, and yes, I can understand your frustration with the government of our American cousins of the (mostly) naive, innocent persuasion, but I, for my side, am not willing to forsake several generation of alliance for a very doubtful full embrace of the proto-fascist dictatorial approach of Mother Russia. I like Russia, I like Russians, but let's say I prefer to keep options open

the vicinity to Brussels seems to distort your views and attitudes, imho, both versus the western part as versus the eastern part of the alliance

Mon, 03/18/2013 - 10:14 | 3342230 Shylockracy
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Remember, Ghordius, geography and demography are destiny. Eurasia is the Heartland, as McKinder put it, and the only possible successor to the dying American order.

Btw, prey tell, who on earth is the "we" you have in mind when you refer approvingly to "the government of our American cousins"? I am still to meet any moral and decent American who underwrites his government with the nonchalance you do. But again, for an appologist of Little Brother (European Soviet Union), Big Brother (US Gov) cannot seem that foreign.

Mon, 03/18/2013 - 13:24 | 3343237 Ghordius
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do I underwrite governments (plural) that engage in treaties? perhaps. does this make me an apologist? only if I write something I don't believe

Mon, 03/18/2013 - 12:26 | 3342957 Panafrican Funk...
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Given that one side of the fight (UK/US) doesn't appear to be any morally better than the other side (Russia/China), I would say, whoever is giving you the better deal, go with them.  

Mon, 03/18/2013 - 14:32 | 3343557 Non Passaran
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Have the eurocrats asked the Cypriots anything? They say they gave Cyprus an ultimatum, "the Greek style".

And speaking of proto-fascism, the EU fits the bill perfectly (and the US isn't too far behind).

Mon, 03/18/2013 - 09:16 | 3341972 wagthetails
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Is EU still wanting to make fuck?

Mon, 03/18/2013 - 10:32 | 3342301 Kirk2NCC1701
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Agreed. Yesterday I blogged that Cyprus accept a gold-backed Ruble, and the naval port, to safeguard their share of the huge gas reserves offshore, that Gazprom can help them develop. Now THAT would be a "Take A Long Walk Off A Short Cyprus Pier!", you EU and IMF scum!

Mon, 03/18/2013 - 08:54 | 3341876 GetZeeGold
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Looks like Vlad might take his ball and go home......can he do that?

Mon, 03/18/2013 - 09:09 | 3341941 ATM
ATM's picture

Nope. Vlad is stuck. When he goes to withdraw his money the teller will ask him to wait a moment while she gets the manager.

The manager will explain that there is a slight problem and he cannot take his cash today. Please comeback tomorrow.....

Mon, 03/18/2013 - 09:33 | 3342037 grunk
grunk's picture

And Vlad tells the manager that he will be back tomorrow with the manager's kids.

If he makes a 100% withdrawal, you get 100% of your children.



Mon, 03/18/2013 - 10:15 | 3342239 ATM
ATM's picture

The kids will be dead either way. 

Mon, 03/18/2013 - 10:29 | 3342279 Hughing
Hughing's picture

I think you onto the problem. The deal is desinged to keep Russia from controlling Cyprus. How Europe doesn't have 20 billion sitting around or on a Fedex truck is baffling.  The Russians are for real, not the candy ass passive agressive sh#t from Brussels.

Mon, 03/18/2013 - 14:47 | 3343664 Lost Word
Lost Word's picture

The old Cold War could turn Hot.

More MAD threats.

More money theft for Military Industrial Banksters.

Mon, 03/18/2013 - 15:53 | 3344082 Mountainview
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Most  the Moscow money is with Cyprus subsidaries of USbanks...and they probabely advised how to handle the issue in advance..

Mon, 03/18/2013 - 09:17 | 3341981 Sheeple Shepard
Sheeple Shepard's picture

I doubt it, that would just be too much! They could, however, as a next best option "dispatch a permanent fleet of five or six combat ships to the Mediterranean Sea..."




Mon, 03/18/2013 - 08:55 | 3341878 pan
pan's picture

I kind of like Putin right now.


Mon, 03/18/2013 - 08:57 | 3341882 Pool Shark
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Enemy of my enemy?...


Mon, 03/18/2013 - 08:59 | 3341895 pan
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