Business | Banking

Cyprus bank bailout review finalised

Amount thought needed by the banks is €10 billion

  • AFP
  • Published: 18:56 February 2, 2013
  • Gulf News

Nicosia: The Cypriot central bank said a study into how much the country’s Greek-exposed banking system needs as part of an EU bailout package was submitted on Saturday.

But the bank said the amount needed by the banks, thought to be €10 billion (Dh50 billion, $13.7 billion), will not be made public until cash-strapped Cyprus has signed bailout deal with international lenders.

“The steering committee has now received the final report on the due diligence review of financial institutions in Cyprus conducted by Pimco and Deloitte,” a bank statement said.

“The results of the report will be made public when the memorandum of understanding is signed between Cyprus and international creditors.”

The degree of bank recapitalisation will determine whether Cyprus needs to adopt even more austerity to make its debt sustainable.

Privatisation

Pimco has reportedly assessed that the banking system will need €10 billion to stay afloat — a figure widely circulated for several months — despite the government arguing that it should be no higher than 8 billion.

At €10 billion, the government would struggle to repay the loan and would need to introduce privatisation of state-own utilities, such as the telecoms service, which it is loath to do.

Nicosia applied for EU financial aid in June when its two largest banks, hard hit by the Greek debt crisis, asked for financial assistance, but talks on agreeing a deal have dragged on.

Eurozone finance ministers will be able to discuss the bailout terms now it has a firm figure for bank recapitalisation.

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