Cyprus RCB bank to close, cites Russia’s invasion of Ukraine | Economic news

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By MENELAOS HADJICOSTIS, Associated Press

NICOSIA, Cyprus (AP) — RCB Bank in Cyprus said Thursday that an “extremely volatile geopolitical situation” prompted it to wind down operations and transform into an asset management company.

The announcement came exactly one month after the start of the Russian invasion of Ukraine. At that time, the bank announced that Cypriot shareholders had acquired the entire 46.29% stake in its share capital previously held by Russian bank VTB.

The bank said in a statement on Thursday that despite its “abundant liquidity”, it would immediately stop opening new accounts or making new loans following an agreement with the European Central Bank.

Deloitte auditors have been appointed to manage the bank’s transition and help settle all of its obligations to depositors. The bank will continue to operate with existing customers as usual until its transition is complete “in the coming months”.

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Earlier this week, the bank announced a 556 million euro ($611 million) sale of its loan assets to Hellenic Bank of Cyprus. Central Bank officials who spoke on condition of anonymity said the sale bolsters the bank’s liquidity to “fully cover” all of its obligations to depositors amid concerns about a steady stream of withdrawals to the over the past few weeks.

Total deposits prior to the acquisition of VTB’s stake amounted to €1.5 billion ($1.65 billion). Some 67% was held by Cypriots, although this percentage has since fallen to just under 50%.

Central Bank officials said deposits hit by sanctions against Russia were “less than 50 million euros”.

Still reeling from a 2013 financial crisis that brought the country to the brink of bankruptcy, Cyprus has been scrambling to rehabilitate its image as a money laundering haven where Russian oligarchs could park their money.

The Cypriot government has said that the impact of Russia’s invasion of Ukraine will be limited due to a series of measures aimed at reducing Cyprus’ exposure to the Russian economy.

Banking officials who spoke on condition of anonymity said Russia-related deposits in Cypriot banks stood at between 4% and 6%.

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