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19 June 2012

Bloomberg: Cyprus said to face Europe pressure for $13 billion aid

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European authorities are pushing Cyprus to take a full bailout package worth as much as €10 billion, resisting the country's attempt to limit any aid to its banking system.

Cyprus is angling for banking assistance to escape the oversight required in the programmes granted to Greece, Ireland and Portugal, said the EU officials who asked not to be named because the talks are private. Cyprus would be the fifth of 17 nations to take a financial lifeline, since Spain is already in talks for a rescue limited to its banks.

The European Central Bank and European Commission want to link any request with the intrusive oversight, since the sums under consideration would surpass half of Cyprus’s €18 billion gross domestic product, dwarfing the size of previous packages.

The government needs as much as €6 billion over two years for the banks, which have been hit by losses in Greece, Michael Sarris, chairman of Cyprus Popular Bank Pcl, the island’s second-largest bank, said on June 15. The government will probably need funds to buy shares in a €1.8 billion rights offer by Cyprus Popular, he said. Last year, the bank posted more than €3.6 billion in losses, mainly on Greek government debt write-downs.

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© Bloomberg

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