Monday Jul 28, 2014 Search
Weather | Athens
31o C
23o C
News
Business
Comment
Life
Sports
Community
Survival Guide
Greek Edition
Cyprus bank rescue won’t hurt senior creditors, says FinMin

Cypriot Finance Minister Vassos Shiarly said senior creditors won’t be forced to take losses in a proposed rescue of the country’s banks.

Only junior bondholders will face losses in the bailout of Cyprus’s lenders, which may need about 10 billion euros of fresh capital, Shiarly said in an interview in The Hague late Thursday. Senior creditors and depositors won’t be touched, he said after meeting with Dutch lawmakers.

“The recapitalization of the banks includes the bailing-in of bondholders,” Shiarly said. The terms of the bank rescue are under consideration as authorities await a final report from Pacific Investment Management Co. on Cypriot lenders’ capital needs. “But I think it concluded as a matter of principle the bailing-in of junior bondholders,” he said.

Cyprus is negotiating with the European Commission, European Central Bank and International Monetary Fund over the size and terms of a rescue for the government and lenders weakened by their exposure to the Greek economy.

Cypriot financial institutions such as Bank of Cyprus Plc and Cyprus Popular Bank Pcl (CPB) lost more than 4 billion euros in a debt restructuring that was part of a second rescue of Greece.

Most junior bondholders are individuals in Cyprus, Shiarly said. “There’s been a lot of discussion and an association has been formed to lobby against the bail-in,” he said. “Unfortunately it’s a necessity.” There has been no talk of imposing losses on depositors, he added.

Pimco report

The Pimco report may be ready as soon as Friday and an agreement on an aid package may be concluded in March, Shiarly said. Cyprus’s bailout may amount to 17.5 billion euros, of which the government would get as much as 7 billion euros to pay its bills and refinance debt, he said.

“We borrow the money to recapitalize the banks, this means a nationalization,” Shiarly said. He said the banks will later be sold, with the proceeds used to reduce the national debt.

Shiarly reiterated Cyprus’s hope that its banks will eventually qualify retroactively for direct aid from the European Stability Mechanism, the euro area’s permanent rescue fund, allowing the loans to be moved from the sovereign balance sheet to the banks.

“Our banks will be recapitalized outside this process, through government lending, but we would very much like to have it,” he said. “Whether it’s going to be available or not will depend on a political decision taken at that particular point in time.”

Letter to Barroso

Cypriot President Demetris Christofias appealed for retroactive direct bank aid in a Jan. 11 letter to European Commission President Jose Barroso.

“We’ve done everything that was requested,” Shiarly told lawmakers in The Hague of his country’s efforts to obtain a bailout. “We are very understanding of sensitivities in certain areas. We will leave it to them. We don’t put pressure on our partners.”

Shiarly said so-called private-sector involvement has been ruled out on Cypriot government debt in bailout talks with the euro area and IMF.

“Government debt is primarily held by local credit institutions, and therefore if you’re going to do PSI, you’ll have to pay for it at the same time by asking for more money to cover recapitalization,” he said.

Shiarly also said that he’s confident a 2.5 billion-euro loan from Russia due in 2016 will be extended soon.

‘In everyone’s interest’

“We have every reason to believe Russia will respond favorably,” Shiarly told reporters. “I believe soon, but it is not up to us. It should be extended; it’s in everyone’s interest.”

After the Cypriot economy’s exposure to Greece hampered the eastern Mediterranean island’s ability to get funding, “Russia was the only country willing to lend to us,” Shiarly said.

Christofias said Jan. 30 that Russia was prepared to contribute to a bailout of Cyprus in cooperation with the European Union. He said Russian President Vladimir Putin assured him in a telephone conversation that Russia was prepared to participate in loans to Cyprus.

[Bloomberg]
 

ekathimerini.com , Friday February 1, 2013 (15:17)  
Great margin for growth in exports
Parliament’s Budget Office says third bailout may be needed
Ryanair ‘not particularly interested’ in Cyprus Air
August 2 expected to be Greek tourism’s D-day
Ministry appeals to keep limit on prescriptions
Faced with the prospect that its attempts to rein in spending on medicines will be scuppered, the Health Ministry appealed on Monday against a Council of State ruling to temporarily suspend ...
Universities aghast at new schools opening
University officials have decried the government’s decision to open two new departments at the same time that funding for the tertiary institutions continues to be slashed. It emerged that t...
Inside News
VOLLEYBALL
Volleyball national team second in European League
Much as the national volleyball team tried to repeat in the finals of the European League the feat it had achieved in the semifinals, it failed to overturn the advantage Montenegro had got f...
SOCCER
Ranieri says he has little to change in Greek national team
The Hellenic Football Federation (EPO) presented Claudio Ranieri as the new Greece coach for the next couple of years, after the Italian manager signed his contract in Athens on Friday. “I l...
Inside Sports
COMMENTARY
Weighing all the factors
Certain people in the know continue to believe that snap elections will take place in the fall. Prime Minister Antonis Samaras is obviously aware of this trend, which is why he told Parliame...
EDITORIAL
Clear rules, for everyone
If we want to deal with the economic crisis, we need clear rules. A large number of individuals and businesses have amassed huge debts they cannot service. And some worrying symptoms have al...
Inside Comment
SPONSORED LINK: FinanzNachrichten.de
SPONSORED LINK: BestPrice.gr
 RECENT NEWS
1. Ministry appeals to keep limit on prescriptions
2. Great margin for growth in exports
3. Universities aghast at new schools opening
4. Anastasiades sees lack of progress on Cyprus talks
5. Supreme Court deputy prosecutor says ex-finance chief should be tried over ‘Lagarde list’
6. UN envoy says he has new ideas, not proposals as he arrives in FYROM
more news
Today
This Week
1. Defense Minister Avramopoulos to represent Greece at European Commission
2. Tree collapses in village square, killing nine-year-old boy
3. Euro inflation seen testing ECB patience as stimulus takes time
4. Maziotis moved to Diavata Prison in Thessaloniki
5. Multi-bill containing prior actions ready for Parliament
6. Minister mulls fixing food and drink prices at non-private beaches
Today
This Week
1. Climber dies in Mount Olympus fall
2. Greek sovereign debt at 174.1 percent of GDP in first quarter
3. Unequal after death
4. Hedge fund Dromeus turns Greek tragedy to triumph with 160 pct gain
5. Quadriplegic woman on life support 'dies due to unpaid power bills'
6. Front-line threats
   Find us ...
  ... on
Twitter
     ... on Facebook   
About us  |  Subscriptions  |  Advertising  |  Contact us  |  Athens Plus  |  RSS  |   
Copyright © 2014, H KAΘHMEPINH All Rights Reserved.