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Cyprus Crisis Sees Russian Investors Flee to Virgin Islands

Published: August 19, 2013 (Issue # 1773)



  • Road Town, Tortola, British Virgin Islands.
    Photo: Wikimedia Commons

President Vladimir Putin's calls for domestic companies to repatriate their funds back home from offshore jurisdictions have fallen on deaf ears, with almost half of the $67 billion investment by Russian residents abroad in the first quarter of this year settling in the British Virgin Islands, according to figures released by the Central Bank on Friday.

The British Virgin Islands saw $31.66 billion of direct investment by Russian residents during the first three months of 2013 in the wake of the banking crisis in Cyprus previously Russians' favorite tax haven. The figure skyrocketed from just $2.1 billion in the first quarter of 2012 and $4 billion during the fourth quarter of last year.

The investments accounted for 47 percent of the $67.2 billion that Russian residents invested outside the country in January through March.

The second largest investment was made in Luxembourg and accounted for $13.9 billion, up from $258 million in the first quarter of 2012 and $1.8 billion during the last three months of last year. Cyprus saw a modest $2.7 billion, down from $4.8 billion in the same period a year earlier, the Central Bank data showed.

"The figures are, apparently linked to the financial problems in Cyprus," said Alexei Devyatov, chief economist at UralSib Capital.

He suggested that, although the Cypriot crisis broke out only in March, many investors had expected problems, and this resulted in redistribution of capital flows between offshore centers in the first quarter of the year.

It might take Cyprus a few years to win back depositors' trust, Devyatov said.

The collapse of the Cypriot banking system earlier this year left the accounts of many Russian companies and individual depositors frozen, followed by a restructuring of the Bank of Cyprus and plans to liquidate Cyprus Popular Bank, also known as Laiki.

The move was part of the bailout plan approved by the Cypriot government and its European Union creditors that also envisaged that the island country's authorities would slash part of the deposits in the Bank of Cyprus exceeding 100,000 euros to recapitalize the lender. The bank's clients falling under this category will lose 47.5 percent of their savings, Reuters reported earlier this month.

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ALL ABOUT TOWN

Thursday, Aug. 28


Learn more about the citys upcoming municipal elections during the presentation of the project Road Map for the Municipal Elections being presented this evening in the conference hall on the third floor of Biblioteka at 21 Nevsky Prospekt. Steve Kaddins, a coordinator for Beautiful St. Petersburg, which gives residents an online forum to lodge complaints about infrastructure problems in the city, will be on hand to answer any questions. The meeting starts at 7 p.m. and is open to all.



Friday, Aug. 29


Park Pobedy will feature the sights and sounds of the world outside of Russia during the Open Art International Festival today. Taste foreign cuisine, learn how to make tea like the Chinese or relax in a hammock during the free event. Although entrance is free, you must register beforehand if you wish to attend.



Saturday, Aug. 30


Break out the tweed and channel your inner Englishman during the English Hunt Picnic this afternoon organized by the Bagmut stables from Krasny Bor in the Leningrad Oblast. Equestrian stunts, English archery and classic hunting fashion will all be available to visitors hoping to live like the characters in Downton Abbey if only for a day. Tickets for the event cost 7,900 rubles ($219.40).


Bookworms will have their chance to swap out well-read classics for something new for their bookshelves at Knigovorot, a free book exchange that will be held in the Yusupov Garden on Sadovaya Ulitsa today. Come for the chance to get a new book or take the opportunity to discuss the literary merits of your favorite authors with fellow fans.



Sunday, Aug. 31


The Neva Delta International Blues Festival wraps up this afternoon on Vasilevsky Island with a concert featuring not only some of Russias best blues bands but international stars as well. Admission is free for all three days of the festival, which begins on Aug. 29, and the shows starting at 5 p.m. each day.



Monday, Sept. 1


Today marks the beginning of Lermontov-Fest, a fall festival celebrating the life of one of Russias most remarkable poets who, in a fate eerily similar to Pushkins, was killed in a duel at the age of 26. Organized by the Lermontov Library System, the next several months will see art exhibitions, concerts and public lectures focusing on the Lermontovs short yet prolific career. Check the Lermontov Library Systems website for more details.



Tuesday, Sept. 2


Join expats and practice your Russian during the Russian Clubs weekly meetings every Tuesday night at 7:30 p.m. The club is free to participate in although you need to be a registered member of Couchsurfing.



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