Saturday

25th Feb 2017

Cyprus seeks €11.5 billion bailout

  • Cypriot bank exposure to Greek debt is costing the island-nation billions (Photo: ColinsCamera)

Cyprus is reportedly seeking a €11.5 billion credit line from member states using the euro to help bailout its troubled banks and close its budget gaps.

The island-nation’s bank exposure to Greek debt restructuring already cost it some €4 billion earlier this year.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

The exposure compelled Nicosia in June to request an EU-IMF bailout after its two largest banks, Bank of Cyprus and Cyprus Popular Bank, revealed massive fiscal holes due to Greek debt exposure.

Finance Minister Vassos Shiarly reportedly said on Thursday (4 October) the banks will need another €5 billion in new capital, reports Bloomberg. The troika of the European Commission, IMF and European Central Bank however put the figure closer to €10 billion.

Cypriot President Demetris Christofias has been opposed to any bailout measures that would entail selling off profitable state-owned companies, ending inflation-based pay increases, and abolishing end-of-year bonuses.

Ending all three, says Christofias, would negatively impact a domestic economy that is facing its first full-blown recession in 40 years.

The troika in July put forward a draft economic adjustment plan, leaked to the media last month, that would require the Cypriots to privatise state-owned enterprises.

The commission had also approved in September a 6-month rescue recapitalisation worth €1.8 billion that Cyprus granted to Cyprus Popular Bank for reasons of financial stability.

The Cypriot authorities, in exchange, agreed to submit a restructuring plan for the bank within six months.

But on Wednesday, Christofias reaffirmed his position and told Greek state broadcaster NET in an interview that “we aren't just saying 'no' to them [troika]. We are giving them counter proposals. They are being prepared, we are in the very final stages and will provide for as much in savings as they want.”

The commission, for its part, noted Christofias’ comments was “not against” the financial assistance programme and that “negotiations are still going on.”

The bailout package comes atop a €2.5 billion loan Cyprus secured from Russia last year after the country was forced out of international bond markets due to excessively high interest rates. Cyprus is now asking Moscow for another €5 billion.

The Cypriot finance ministry said the government is also facing €751 million maturing debt through November and some €4.7 billion of bond redemptions up until 2015, reports Bloomberg.

Meanwhile, troika officials are expected back in Cyprus later this month to flesh out the final details of the bailout deal.

Investigation

Cyprus launches probe into Russian mafia money

Cyprus has opened an investigation into evidence that stolen Russian tax money linked to the murder of Sergei Magnitsky was laundered through its banks.

Greece and creditors break bailout deadlock

Athens agreed on budget cuts worth up to €3.6 billion and extracted some concessions from creditors, but the IMF warned the package might not be enough.

News in Brief

  1. Spanish court jails former IMF chief Rato
  2. Macron proposes Nordic-style economic model for France
  3. Germany posts record high budget surplus
  4. Labour ousts Ukip in Brexit homeland
  5. Dutch lower house approves EU-Ukraine treaty
  6. WTO says Russian pork ban was illegal
  7. Belgian nuclear plant made 'significant progress' on safety
  8. Report: Commission gauging EU support for Poland sanctions

Stakeholders' Highlights

  1. EURORDISJoin Rare Disease Day and Help Advocate for More Research on Rare Diseases
  2. European Healthy Lifestyle AllianceStudents Who Are Considered Fit Get Better Grades in School
  3. QS World MBA TourMeet with Leading International Business Schools in Paris on March 4th
  4. Malta EU 2017Economic Governance: Agreement Reached on Structural Reform Support Programme for Member States
  5. Socialists & DemocratsWomen Have to Work Ten Years Longer to Match Lifetime Earnings of Men
  6. Counter BalanceTrans-Adriatic Pipeline Is a Major Risk for Banks, Warns New Analysis
  7. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  8. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  9. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  10. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  11. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  12. Centre Maurits CoppietersMinorities and Migrations