Cyprus’ RCB Bank to close, cites Russia’s Ukraine invasion

March 24, 2022 GMT
A man walks past a branch of the RCB bank, Russian Commercial Bank, in Makedonitissa area in capital Nicosia, Cyprus, Thursday, March 24, 2022. RCB Bank in Cyprus said an "extremely volatile geopolitical situation" has prompted it to will wind down operations and turn itself into an asset management company. (AP Photo/Petros Karadjias)
A man walks past a branch of the RCB bank, Russian Commercial Bank, in Makedonitissa area in capital Nicosia, Cyprus, Thursday, March 24, 2022. RCB Bank in Cyprus said an "extremely volatile geopolitical situation" has prompted it to will wind down operations and turn itself into an asset management company. (AP Photo/Petros Karadjias)
A man walks past a branch of the RCB bank, Russian Commercial Bank, in Makedonitissa area in capital Nicosia, Cyprus, Thursday, March 24, 2022. RCB Bank in Cyprus said an "extremely volatile geopolitical situation" has prompted it to will wind down operations and turn itself into an asset management company. (AP Photo/Petros Karadjias)
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A man walks past a branch of the RCB bank, Russian Commercial Bank, in Makedonitissa area in capital Nicosia, Cyprus, Thursday, March 24, 2022. RCB Bank in Cyprus said an "extremely volatile geopolitical situation" has prompted it to will wind down operations and turn itself into an asset management company. (AP Photo/Petros Karadjias)
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A man walks past a branch of the RCB bank, Russian Commercial Bank, in Makedonitissa area in capital Nicosia, Cyprus, Thursday, March 24, 2022. RCB Bank in Cyprus said an "extremely volatile geopolitical situation" has prompted it to will wind down operations and turn itself into an asset management company. (AP Photo/Petros Karadjias)

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

The announcement came exactly a month after the start of Russia’s invasion of Ukraine. At that time, the bank announced that Cypriot shareholders had acquired all of the 46.29% stake in its share capital previously held by Russia’s VTB Bank.

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

Auditors Deloitte have been appointed to manage the bank’s transition and help settle all its obligations to depositors. The bank will carry on business with existing clients 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 Cyprus’ Hellenic Bank. Central Bank officials who spoke on condition of anonymity said the sale buttresses the bank’s liquidity to “fully cover” all its obligations to depositors amid concerns over a steady stream of withdrawals over the past few weeks.

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

Central Bank officials said deposits affected by sanctions against Russia were “under 50 million euros.”

Still reeling from a 2013 financials crisis that put the country on the verge of bankruptcy, Cyprus has been at pains to rehabilitate its image as a money laundering haven where Russian oligarchs could park their cash.

The Cypriot government has said the impact of Russia’s invasion of Ukraine will be limited because of a raft of measures to reduce Cyprus’ exposure to the Russian economy.

Banking officials who spoke on condition of anonymity said that Russia-linked deposits in Cypriot banks amount to between 4% and 6%.