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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, July 24


Liliana Modiliani, a well-known Russian stylist, will talk about choosing clothes that fit during her lecture at 7 p.m. at the Pryamoy Efir art club, 13 Viborgskoe Shosse.



Friday, July 25


Discuss Russia’s economic and political prospects for 2014 during a Business Breakfast organized by SPIBA at 9.30 a.m. in the Bank Saint-Petersburg office at 64


Malookhtinsky Prospekt.


Start your weekend with adorable miniature pigs at the Squealing Pig festival at 7 p.m. this evening in the Karl & Friedrich restaurant, 15 Iozhnaya doroga, on Krestovsky Island.



Saturday, July 26


Hundreds of brand-new and retro cars, drag and drift shows, test drives and karting are planned for the Avtobum-2014 festival, which will take place in front of the RIO shopping center at 2 Fuchika Ulitsa.


Participants in today’s SaniDay Summer competition will impress visitors with their hand-made, unusual and hilarious boats, which will race at the Igora Resort near the 54th kilometer on Priozerskoe Shosse.


Metro Family Day will include both serious lectures for adults and master-classes for children, making the event interesting for the whole family. To participate, come to Kirov Park on Yelagin Island.


Photography will be the focus of today’s Photosubbota, which features lectures by famous photographers, meetings with photo schools and studio representatives, and participation in a photography competition. The event starts at noon at Petrokongress, 5 Lodeynopolskaya Ulitsa.


If you like cycling, make sure to visit the Za Velogorod Festival with its retro bike exhibition, market and live music. The second round of the Leningrad Criterium race will also take place during the event at Petrovsky Arsenal in Sestroretsk.



Sunday, July 27


Navy Day will be celebrated with a weapon and military transportation exhibition, self-defense master classes and concerts. The event starts at 1 p.m. in the 300th Anniversary Park of St. Petersburg.



Monday, July 28


Don’t miss a chance to see the latest achievements in robotics during the RoboDom interactive show, exhibiting more than 150 robots. The show will be at BUM center, 22/2 Gzhatskaya Ulitsa, until Aug. 3. The entrance ticket costs 350 rubles ($10).



Tuesday, July 29


A video of a Queen concert from 1986 will be shown today at 8 p.m. in Yaschik, 50/13 Ligovsky Prospekt.



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