Bloomberg News

Cyprus Continues Talks With EU, Other Countries for Funds

June 21, 2012

Cyprus is in negotiations with the European Union for a possible rescue package, while it also looks into the prospect of loans from an individual nation, Cypriot government spokesman Stefanos Stefanou said today.

“We are in continuous touch and dialogue with the European partners and EU’s institutions and work simultaneously in the direction of securing a bilateral loan from another country,” Stefanou said in a statement on the website of the Press and Information Office.

“Cyprus’s government continues to implement its decisions related to strengthening the Cypriot economy, which stands on sound foundations and when the time comes, final decisions will be taken, always in a dialogue, fine-tuning a cooperation with the EU,” the east Mediterranean island’s government spokesman said.

Cyprus, which has been shut out of markets since May last year, is pursuing a loan from other nations, including Russia, and also considering requesting aid from the euro-area’s firewall funds in order to finance the recapitalization of its banking sector, hurt in writedowns of Greek government debt held by banks. Euro area finance ministers who are meeting in Luxembourg tonight may discuss the prospect of extending financial rescue to the euro area’s third-smallest economy.

Lawmaker Nicholas Papadopoulos told reporters in Nicosia today after the finance committee hosted the chairman of Cyprus Popular Bank, Michael Sarris, in a closed meeting, that “the bank continues to face some difficulties related to its recapitalization,” without giving further details. The island’s government decided in May to underwrite the issue of 1.8 billion euros ($2.3 billion) in preference shares of its second largest lender, Cyprus Popular.

State-owned radio CyBC reported today that it can’t be ruled out that Russia’s financial aid to Cyprus may be accompanied by the demonstration of interest by Russian entrepreneurs to invest in Cypriot banks. CyBC cited no source.

To contact the reporters on this story: Stelios Orphanides in Nicosia at sorphanides@bloomberg.net; Rebecca Christie in Brussels at rchristie4@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net


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