Looking to Athens with hope
June 19, 2012
Greece's election cleared the way for the Greek part of Cyprus to get urgently need funds for the recapitalization of its banks by the end of the month, the country's finance minister, Vassos Shiarly, said in Nicosia on Tuesday.
Cyprus' banks are heavily exposed to Greek debt. The prospect of a new Greek government rejecting an EU and IMF bailout had been viewed as a potential catastrophe that could have multiplied the cost of Nicosia's own bailout.
The Republic of Cyprus is facing a June 30 deadline to obtain 1.8 billion euros ($2.27 billion) to recapitalize its second-largest lender, Cyprus Popular Bank, which was severely hurt by exposure to Greek debt.
Time's running out
The Mediterranean island nation could become the fifth eurozone member to turn to one of the European Union's bailout funds, after Greece, Ireland, Portugal and Spain. But it has also been considering taking a bilateral loan instead, with Russia widely being viewed as a possible partner.
Cyprus has lost access to bond markets for financing, with yields on its sovereign debt being well into double digits on non-standard secondary markets. It was able to get a 2.5-billion-euro loan from Moscow last year to avoid an earlier bailout.
"We believe that with a new pro-euro Greek government swifter arrangements can be made," Finance Minister Shiarly said in a statement. He did not say how much the government would seek beyond the 1.8 billion euros for Cyprus Popular. No application to the bailout fund has yet been submitted, but any bid looks certain to look at the overall needs of the economy.
hg/pfd (Reuters, dapd)