Kazakhstan’s depositors keeping about $50 million with Cyprus banks
Mar 21. Tengrinews
Kazakhstan’s citizens’ deposits kept with Cypriot banks do not exceed $40-50 million, a Tengrinews.kz journalist reports, citing FINAM investment holding company experts. Individuals account for most of the deposited amount.
Anton Soroko, a FINAM analyst, notes that given the insignificant cooperation between Kazakhstan and Cyprus [Kazakhstan’s FDI to Cyprus for the 9 months of 2012 stood at $0.8 million, whereas in 2011 the figure made up $40.6 million] one may assume that the amount of Kazakhstan citizens’ money deposited with Cyprus banks is not substantial.
He elaborated that Cyprus banks keep about $25.6 billion from foreign depositors coming from outside the financial sector. “It’s early to be alarmed. No final decision has been taken yet. Both individuals and companies might face non-recurrent losses related to the suggested tax”, the analyst believes.
Olzhas Khudaibergenov, Director of the Kazakhstan Institute for Macroeconomic Studies, said, citing the country’s Vice Minister of Finance, that Kazakhstan’s individuals and entities keep around $1.1 billion with Cypriot banks. According to him, the actual figure might be 2-3-fold bigger as part of the money was channeled to Cyprus via other countries.
He believes that tax deductions from this amount will have no tangible impact on Kazakhstan. “The fact of money being withdrawn out of Kazakhstan to Cyprus banks has a much greater effect”.
According to Anton Soroko of FINAM, possible postponements in transactions due to the short bank “time off” [banks on Cyprus were closed to avoid bank run] on Cyprus are an important factor. Some companies might face difficulties related to their inability to use money kept with Cyprus banks.
“Whatever the final decision is, there is every reason to believe depositors’ confidence in Cyprus as an “island of stability” has been undermined (…) Certain amount of money will certainly be withdrawn from the country. Some shift to other offshore zones is possible; however, depositors might think of turning to more expensive but more stable banks based in other countries”.
Kazakhstan’s Central Bank Governor Gregory Marchenko earlier announced that “there are no deposits of Kazakhstan’s individuals or entities kept with Cyprus banks. According to him, Kazakhstan’s banks have had no dealings with banks of Cyprus; Cyprus has been a sphere of Russia’s interests more.
The European Central Bank offered the Cypriot government a bailout package on condition that it levies a one-time tax on the country’s bank deposits. Cyprus authorities have been thinking of introducing taxes on deposits in exchange for the financial aid. The authorities suggested introducing a 6.75% non-recurrent tax on deposits under 100 000 Euro and a 9.9% tax on deposits exceeding that amount. Deposits below 20 000 Euro will be exempted from the tax. In a vote on Tuesday, the island’s legislature rejected the proposed tax on bank deposits in exchange for the aid.