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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, Oct. 30


Dental-Expo St. Petersburg 2014 concludes today at Lenexpo. Welcoming specialists from throughout the federation, the forum is an opportunity for dentists to share tricks of the trade and peruse the most recent innovations in technology and equipment, with over 100 companies hocking their wares at the event.



Friday, Oct. 31


Put your grammar and logical thinking to the test in a fun and friendly environment during the British Book Center’s Board Game Evening starting at 5 p.m. today. The event is free and all are welcome to attend.



Saturday, Nov. 1


The men and women who dedicate their lives to fitness get their chance to compete for the title of best body in Russia at today’s Grand Prix Fitness House PRO, the nation’s premier bodybuilding competition. Not only will men and women be competing for thousands of dollars in prizes and a trip to represent their nation at Mr. Olympia but sporting goods and nutritional supplements will also be available for sale. Learn more about the culture of the Indian subcontinent during Diwali, the annual festival of lights that will be celebrated in St. Petersburg this weekend at the Culture Palace on Tambovskaya Ul. For 100 rubles ($2.40), festival-goers listen to Indian music, try on traditional Indian outfits and sample dishes highlighting the culinary diversity of the billion-plus people in the South Asian superpower.



Sunday, Nov. 2


Check out the latest video and interactive games at the Gaming Festival at the Mayakovsky Library ending today. Meet with the developers of the popular and learn more about their work, or learn how to play one of their creations with the opportunity to ask the creators themselves about the exact rules.



Monday, Nov. 3


Non-athletes can get feed their need for competition without breaking a sweat at the Rock-Paper-Scissors tournament this evening at the Cube Bar at Lomonosova 1. Referees will judge the validity of each matchup award points to winners while the city’s elite fight for the chance to be called the best of the best. Those hoping to play must arrange a team beforehand and pay 200 rubles ($4.80) to enter.



Tuesday, Nov. 4


Attend the premiere of Canadian director Xavier Dolan’s latest film “Mommy” at the Avrora theater this evening. The fifth picture from the 25-year-old, it is the story of an unruly teenager but the most alluring (or unappealing) aspect is the way the film was shot: in a 1:1 format that is more reminiscent of Instagram videos than cinematic art. Tickets cost 400 rubles ($9.60) and snacks and drinks will be available.



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