ECONOMICS > Bad news for Greek Cyprus ahead of EU presidency

LONDON - Reuters

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Greek Finance Minister Giorgos Zanias arrives for an Eurozone Council on June 21, 2012 at the Kirchberg conference center in Luxembourg.  AFP Photo

Greek Finance Minister Giorgos Zanias arrives for an Eurozone Council on June 21, 2012 at the Kirchberg conference center in Luxembourg. AFP Photo

Only days before taking over the term presidency of the European Union on July 1, Greek Cyprus’ leaders will discuss today options for reviving an economy on the verge of succumbing to a bailout, with a debate raging on whether the country should seek aid from the EU’s rescue fund or look further afield.

Political leaders would meet today in the afternoon, a press release from the presidency said, shortly after ratings agency Fitch cut the island’s sovereign debt to non-investment grade.

Heavily exposed to the crisis in Greece, cash-starved Greek Cyprus needs to recapitalize its second-largest bank by June 29. For weeks, it has been trying to juggle its options between a bailout from Europe’s EFSF fund or a bilateral loan from either Russia or China.

It was unclear whether a loan from either country would be forthcoming, giving the Mediterranean island precious little leeway to rustle together 1.8 billion euros for Cyprus Popular Bank by the end of the week.

Fitch downgrades Cyprus

Government sources have told Reuters that President Demetris Christofias wanted to consult political leaders before taking a definitive decision, suggesting one was close.

Earlier yesterday Fitch downgraded Greek Cyprus to BB+, saying Cypriot banks could potentially need up to 4 billion euros in capital primarily on the back of losses in Greece.

Fitch said the amount, representing 23 percent of Greek Cypriot GDP, was mainly related to exposure in Greece, though a rapidly growing increase in non-performing loans at home was also a factor.

“Even assuming Greece remains in the eurozone, Greek Cypriot banks will have to bear significant loan losses as the Greek economy continues to contract over the medium-term as well as the deterioration in domestic asset quality,” Fitch said.

Fitch said it saw a heightened possibility of the Republic needing an EFSF bailout to recapitalize its banks, and a bilateral loan from the Russian federation to cover gross budgetary financing requirements until the end of 2013.


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Notice on comments

Chris Green

6/28/2012 4:44:55 PM

Typo correction: 'Pulling back to what is NOW the permanent border'

Chris Green

6/28/2012 3:09:06 PM

Turkey's legitimate intervention was necessitated by the events that even you Kirios, acknowledge. They could have re-taken the entire island but for the fact the the second stage of the advance was so rapid (Greeks ran away) that they outstretched their supply lines giving Kissenger the chance to bully Ecevit into pulling back to what is not the permanent border. Nothing you, or any other Greek or GC can say or do will cause the TSK to withdraw and that is the reality. You lost - get over it!

Chris Green

6/27/2012 6:18:57 PM

What WAS illegal was the treatment of Turkish Cypriots during the 60's and 70's by the Greeks as acknowledged by Kyrios. The Intervention by Turkey was both fully justified and given their Guarantor Power status,legal too. As for peace, there has been peace on Cyprus since the end of the 30 day operation in 1974 and this has been maintained and continues due to the permanent presence of the TSK in the equally forever divided island.

kerem atan

6/26/2012 8:18:11 PM

Kirios Kypros ,do u think it was legal when turkish cypriots were subjected to the attrocities and forced out of their homes into small enclaves between 1963 and 1974. u could say it is our propaganda. but u can also read UN report in 1964 in order to find out the facts. u better face ur own history rather than blaming turks and calling them invaders.

Chris Green

6/26/2012 1:00:56 PM

Othello, Act 1, Scene 3 (Shakespeare) reminds the world of the importance of Cyprus to 'The Turk'. Anasastia may be familiar with it! And Kypros, the TSK quite legally INTERVENED in 1974: It was the GNG that invaded during 1964! The TSK are unlikely to be going anywhere!

anastasia morosini

6/26/2012 12:38:08 PM

ILKER AVNI The Greek Cypriots may remind you of whatever you want,but the 'play'!! Oliver Twist reminds nobody of Shakespeare,as 'Hamlet' 'King Lear' etc do not remind anybody of Charles Dickens.

Dennis Kavaz

6/26/2012 9:26:20 AM

Mr Christofis after gaining the G Cypriot presidency to impress the G Cypriots and to scare the T Cypriots, he purchased 41 Russian war tanks. Furthermore while in Cyprus (a year ago) I was told by a G Cypriot that South Cypriot economy was doing so well, most G Cypriot house holds employed Asian house maid (servant) What’s more (a working widow with children) the Government was paying a maid to look after the children, and clean the house once a week.

john albay

6/26/2012 4:19:49 AM

The greek zone of cyprus could no longer hide the truth and has now declared it self Bankrupt so much for their lies about how great life is in their puppet statelet and how bad everything is in the TRNC! What a disgrace to have to beg for money just before their big show as president of the EU! No one will take the greek cypriots seriously but then nobody ever did they have lied to many times and been exposed! They even have gangland shootings in their tourist centre what a mess they are in!!!

ilker avni

6/26/2012 3:19:40 AM

The Greek Cypriots remind me of a shakespearian play Oliver twist,when the boy goes up with his bowl and says "Please sir can i have some more".Congratulations on they new grading from fitch to non investment grade,This means no more wild spending at the casinos with the EU money,borrowing will be non. Investment will be non maybe for the next ten years.You LUCKY greeks joining the Euroland dream, thanks for stopping Turkeys entry otherwise we might have ended up like you...
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