FRANKFURT (MNI) – The likelihood Cyprus will turn to the European
bailout fund for assistance is growing as the country looks for E1.8
billion in recapitalization before the end of this month, European
Central Bank Governing Council member Panicos Demetriades told the
Financial Times.
Cyprus’ Popular Bank, the country’s second largest lender, requires
at least E1.8 billion in funds by June 30 and appears to have little
choice but to turn to Europe for assistance.
“Clearly the closer you get to the deadline, the less unlikely it
becomes,” Demetriades, who recently replaced Athanasios Orphanides as
head of the Cypriot central bank, said in a interview published online
Sunday afternoon.
Demetriades said Cyprus was in talks with European authorities to
push back the deadline to the end of August. But, “there is a backstop
there and the backstop is the European Financial Stability Facility and
that backstop will be used if necessary.”
With their significant exposure to Greek bonds, Cypriot banks have
been hit hard by the debt crisis. Cypriot President Dimitris
Christofias, blaming Orphanides for failing to predict the extent of
losses to the Cyprus banking system, decided not to renominate him as
head of the central bank after his term expired at the end of April.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
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