REFILE-UPDATE 3-Russia backstops Cyprus bailout despite anger

Tuesday 26th March, 2013

Tue Mar 26, 2013 3:01am EDT

* Putin orders govt to renegotiate Cypriot bailout loan

* FinMin links easier terms to banking cleanup

* No free pass from Kremlin for offshore structures

By Douglas Busvine and Darya Korsunskaya

MOSCOW, March 25 (Reuters) – Russia signalled on Monday it would backstop the European Union’s bailout of Cyprus despite anger that the weekend rescue deal would impose heavy losses on uninsured depositors, many of them Russian.

President Vladimir Putin ordered his government to negotiate the restructuring of a bailout loan it granted to Cyprus in 2011 – having rejected Nicosia’s request for easier terms in crisis talks last week.

Putin “considers it possible to support efforts … aimed at overcoming the crisis in the economy and banking system of this island state,” his spokesman Dmitry Peskov said.

Russia has repeatedly expressed its dismay at Europe’s handling of the debt crisis in Cyprus, while until now rebuffing the entreaties of President Nicos Anastasiades to offer significant financial support of its own.

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