How the banking crisis still affects Russian-Cypriot relations today

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A Russian law restricting tax privileges enjoyed by Russian-owned companies abroad may have little to no impact on Russian business activity in Cyprus. Developments in the banking sector which led to the loss of deposits, held at Laiki bank, as well as the suspension of the operations of as FBME (the Federal Bank of the Middle East) created a serious disturbance of Russian business activity in Cyprus.
A Russian law restricting tax privileges enjoyed by Russian-owned companies abroad may have little to no impact on Russian business activity in Cyprus. Developments in the banking sector which led to the loss of deposits, held at Laiki bank, as well as the suspension of the operations of as FBME (the Federal Bank of the Middle East) created a serious disturbance of Russian business activity in Cyprus and therefore the common liquidation of Russian companies, commented Yuri Pianykh, Chairman of the Association of Russian Businessmen in Cyprus.

In March 2013, depositors at Laiki, the second largest lender on the island at the time, lost all their deposits in excess of €100,000, when the bank collapsed. The FBME’s Cyprus operations have also remained frozen since July 2014, after the Central Bank of Cyprus placed it under administration following various money laundering allegations.

A further factor negatively affecting Russian business operations in Cyprus is related to sanctions imposed on Russia by EU countries. The sanctions prohibit certain Russian residents from entering the EU and restrict access to funding for Russian energy and financial companies, “this even affected those individuals who have made a respected contribution into development of bilateral Russian-Cypriot relationships,” Pianykh said.

The weaker rouble will also affect incoming tourism from Russia, Pianykh said. Directly or indirectly, tourism amounts to a quarter of Cyprus’s economy while Russians are the second highest number of visitors on the island.