Russia may reduce Cyprus loan rate as part of restructuring

By Ilya Arkhipov & Scott Rose

Russia may reduce the interest rate and extend the maturity on the 2.5 billion-euro ($3.4 billion) loan it offered Cyprus in 2011, Finance Minister Anton Siluanov said as he urged Europe to lead a bailout of the island nation.

“We’re prepared to ease the terms, restructuring the debt and possibly also looking at the rate,” Siluanov told reporters on a flight to Sochi, the southern Russian city that hosts next year’s Winter Olympics.

Russia, which counts Cyprus as its biggest source of foreign direct investment, is more focused on changes to the existing credit than considering a request for a new loan from the eastern Mediterranean country, Siluanov said. He reiterated Russia’s position that euro-area countries should lead the way on any potential bailout.

Cyprus is negotiating with the European Commission, the European Central Bank and the International Monetary Fund over the size and terms of a rescue for the government and banks weakened by exposure to the Greek economy. Cypriot financial institutions such as Bank of Cyprus Plc and Cyprus Popular Bank Pcl lost more than 4 billion euros in a debt restructuring that was part of a second rescue of Greece.

“Our steps to meet them part way can’t solve the Cyprus problem without significant financial support from the European Union,” Siluanov said.