Fraction of deposits frozen by Russia sanctions

A small fraction of deposits in Cypriot banks have been frozen following EU sanctions on Russia and its wealthiest and most influential oligarchs, with close ties to the Kremlin, said Cyprus Central Bank Governor.

The island’s chief banker, Constantinos Herodotou, said, “frozen deposits amount to a few tens of millions, a figure which is not at all worrying”. According to data, deposits in Cyprus’ banking system were at a record high of EUR 51.6 bln in January. Talking to state radio CyBC, Herodotou noted that Russian deposits in the banking system have been declining since 2014.

He confirmed that the list of 800 Russian businesspeople sanctioned by Brussels includes a Russian shareholder in a Cypriot bank, adding that the United States has also sanctioned the individual involved.

“The individual does not have a say in the bank’s management, as are they not a member of the Board,” said Herodotou.

He said the individual could neither sell their bank shares due to sanctions.

“It is up to the bank to decide how they will handle the case and how much risk they are prepared to take on.”

The Central Bank Governor believes that Cyprus can sail through the crisis created by the war in Ukraine as long as it shows flexibility, acts preemptively and adjusts its economic model.

“If we look at it from the point of view of tourism, which the war will certainly impact, we must move in a timely manner to replace the gap that will be created by the Russian market, at least for 2022.

“If we look at it from the point of view of professional services, such as lawyers and accountants who offer services to Russian entities affected by sanctions, they diversify their clientele, turning towards other sectors with promising prospects”.