ECONOMY

Cyprus keeping bailout options open

Cyprus is keeping its options open on whether to apply for a European Union bailout to help recapitalise its second largest bank but has yet to make any application, the government said on Tuesday.

“I want to be clear concerning various reports which suggest the Republic has decided to go to the (EU) mechanism, or that there have been contacts to this effect,» government spokesman

Stefanos Stefanou said. «I have to say there is no such decision or any investigation of intent concerning admission to the mechanism.”

But he added: «The government has various options concerning the recapitalisation of the banks and one of its options is to resort to the (EU bailout) mechanism.”

Cyprus had strongly hinted on Monday that it might have to apply for an international bailout before the end of this month because of dwindling options for propping up its banks, which are highly exposed to Greece.

It must recapitalise its second-largest lender, Cyprus Popular Bank, by a June 30 regulatory deadline ? one day before the country assumes the rotating EU presidency for six months.

Shut out of financial markets for a year and running deficits, Cyprus needs 1.8 billion euros ($2.2 billion), equivalent to 10 percent of its gross domestic product, just to prop up Popular.

[Reuters]