Cyprus's central bank has demanded that privately held Bank of Cyprus finalise plans this week to raise at least 1 billion euros in a capital issue, media reported on Wednesday.
Central Bank Governor Chrystalla Georghadji, in a letter published in the Simerini newspaper, gave the bank a three-day deadline to affirm its plans for the completion of a capital issue by Aug. 8.
There was no immediate comment from the central bank or the bank to the letter, which was dated July 1 and addressed to Bank of Cyprus chairman Christis Hassapis.
Bank of Cyprus, which recapitalised by confiscating uninsured deposits of its clients last year, said last week that it was examining its funding options but did not go into detail.
There has been widespread speculation about friction on the board over the timing and conditions of any issue, particularly how it could affect existing shareholders.
Several wealthy Russians became stakeholders in the lender when their deposits were turned into equity, a process known as a 'bail-in' and a condition of the 10 billion euro international rescue package Cyprus received last year.
In her letter, Georghadji said the maximum limit of a clawback to existing shareholders should not exceed 20 percent.
Bank of Cyprus is one of four Cyprus-based banks that will be included in stress tests on European banks later this year.
Based on the most recently available data, Bank of Cyprus had a core tier 1 capital, a ratio of financial strength, of 10.4 percent, increasing slightly to 10.6 percent from the disposal of Serbian assets in May.
Under stress test baseline scenarios the ratio should exceed 8 percent, and in an adverse scenario 5.5 percent. [Reuters]