As the Cypriot parliament convenes in an emergency session to decide whether to ask its citizens to part-fund a bailout for the country's banks, the shadow of Russian money on the island in the form of billions of euros of banking deposits and a $3.3 billion loan, looms large.
Investors in Europe are digesting the news of Cyprus' surprise bailout proposal which includes a levy on savers as a condition for 10 billion euros in financial aid. Dow Jones Cyprus reported on Monday that the initial proposal will be amended.
According to two sources cited by the agency, the new proposal would see savers with less than 100,000 euros in their accounts pay a one-time tax of 3 percent (the initial figure was 6.75 percent). Those with deposits from 100,000 to 500,000 euros would pay 10 percent and anyone with over 500,000 euros in their accounts would pay 15 percent.
(Read More: Cyprus Bailout 'Disaster' Risks New Euro Crisis)
With an estimated 37 percent of the $68 billion of deposits in Cypriot banks belonging to foreigners, many of whom Russian investors and businesses according to experts, Cypriots are not the only savers that could lose money under the deal.
Vladimir Putin's spokesman quoted the Russian President as saying on Monday morning that a deposit levy would be "unfair, unprofessional and dangerous", Reuters reported.
Conservative reports put the amount of personal deposits of Russian money in Cypriot banks at 20 billion euros, though it could be as high as 35 billion euros, according to media reports. Last year, Moody's ratings agency reported that at the end of 2012, Russian banks had around $12 billion placed in Cypriot banks, an increase of around $3 billion from 2011, according to data from Russia's central bank.