The relationship between Cyprus and Russia will not be damaged as a result of a bailout deal Cyprus struck with its European partners, Cypriot finance minister Michael Sarris told CNBC, even though many Russian depositors will be hit hard by the agreement.
(Read More: Cyprus Clinches Last-Minute Deal to Secure Bailout)
"I think the Russians were understandably disappointed with this turn of events. They have had a long, successful and happy history and association and this has come partly as a shock despite the fact that many of these things had been rumored," Cyprus' finance minister, Michael Sarris, said early on Monday in Brussels.
The last-minute deal between Cyprus and its international lenders involves setting up a "good bank" and a "bad bank" and includes a levy on uninsured deposits over 100,000 euros ($130,000) at the second largest lender, the Popular Bank of Cyprus (Laiki) which is set to be wound down. Any deposits below 100,000 euros at the Popular Bank of Cyprus will be protected and moved to the Bank of Cyprus, the country's largest bank.
Meanwhile, Russian President Vladimir Putin has instructed his government to negotiate the restructuring of a pre-existing $3.2 billion Russian loan to Cyprus, according to his spokesman. Last week, Cyprus requested an extension to the loan and a reduction in its interest to 2.5 percent from 4.5 percent.
Reuters quoted Putin's spokesperson as saying the Russian President "considers it possible to support efforts... aimed at overcoming the crisis in the economy and banking system of this island state".
(Read More: Will the Cyprus Deal Take the Euro Far?)