Russia and Cyprus signed an agreement restructuring a €2.5 billion loan, the Cypriot government said in a statement on Thursday. Nicosia was hoping at the time of its €23 billion spring bailout, which initially parliament voted against, for such an agreement.
The Cypriot government's statement said the restructuring provides for the repayment of the loan in eight six-monthly installments starting in 2018, instead of a one-off repayment in 2016.
It also provides for lowering the interest to 2.5 percent from its original level of 4.5 percent, with effect as of last March.
The restructuring agreement was signed in Moscow by Russian Deputy Finance Minister Sergey Storchak and Cypriot Finance Minister Haris Georgiades.
The loan was obtained by Cyprus in December 2011, as the government at that time desperately tried to delay or entirely avoid a bailout.
However, it finally had to apply for bailout in June 2012, after the Cypriot banks took a hit on account of their exposure to the write-down of Greek debts.
The bailout deal agreed with the Eurogroup and the International Monetary Fund in March involved the recapitalization of the island's largest lender, Bank of Cyprus by using 47.5 percent of deposits over 100,000 euros and the winding down of the second largest lender. It also led to unprecedented controls to restrict the flight of capital which have yet to be lifted.
Many Russian and Ukrainian depositors who lost money in the recapitalization have become shareholders in the country's biggest bank, having a controlling share of the bank's equity.
Cypriot President Nicos Anastasiades said in an interview with Russian Itar-Tass news agency on Thursday that the government intends to partly compensate the losses of Russian depositors as a gesture of appreciation.
He said the Russians did not desert Cyprus despite bad decisions which hurt them and they deserve to get back part of their money.
"Our friends have remained our friends," Anastasiades said.
He added that a special fund will be set up into which part of future proceeds from the sale of newly found natural gas will be channeled.
Six Russians are among the members of the newly elected board of Bank of Cyprus. A one-time colleague of Russian President Vladimir Putin at the KGB, Vladimir Stralskofski was elected vice-president of the board. (
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