World Bulletin/News Desk
Cyprus will require up to 10 billion euros ($13 billion) to refinance its banks, severely affected by the euro zone debt crisis and exposure to Greece, according to a draft deal with international lenders seen by Reuters on Friday.
The deal, contingent on approval from euro zone finance ministers and national parliaments, also states that the objective of the adjustment programme with the Mediterranean island is to achieve a primary balance of 4.0 percent of GDP in 2016.
"Noting that the European Banking Authority (EBA) deadline of 30 June 2012 has been missed by two banks and that public capital support has already been provided to one bank, while the State itself is under financial stress, a bank support facility of up to EUR billion is foreseen under the programme, which will also cover potential future capital needs, determined on the basis of a top-down capital exercise, as well as potential resolution costs," the draft deal obtained by Reuters states.
The exact amount per bank would be determined in a due diligence exercise, the report said, while brackets surrounding the recapitalization needs suggested it could be subject to change.
Earlier on Friday, Cypriot Central Bank governor Panicos Demetriades said the amount was an estimate, pending assessments from consultants expected next week.
The document also said the Cypriot central bank would direct all banking groups to increase their minimum Core Tier 1 capital ratio - a measure of financial strength - to 9 percent from 8 percent by Dec. 2013.
A process of on-going fiscal consolidation would seek to achieve a 4.0 percent of GDP primary balance in 2016, "and maintain such a level thereafter", the document stated.
Employees in the public sector would received a scaled reduction in pay from between 6.5 and 12.5 percent, it said.
Cyprus sought aid from the IMF and the EU in June after its banks reported significant losses on a restructuring of Greek debt earlier in the year.
Media reports have suggested that Cyprus's total bailout needs, including fiscal requirements, could reach 17.5 billion euros, virtually the equivalent of its gross domestic product.
Index sees increase of 1.1 percent from April, according to official data
Oil prices tumble after OPEC extends production cuts
3 major indexes close with gains for fourth trading day in row
Agency expects China's financial strength ‘to erode somewhat over the coming years’
The British capital's FTSE 100 index of leading blue-chip companies wobbled between gains and losses during the day, before finally closing down 0.2 percent.
BIST 100 index opens 0.17 percent lower; US dollar/Turkish lira rate stands at around 3.57
With his tough rhetoric on winning back American jobs, President Trump's elevation to the White House has raised serious fears over a new protectionist era.
Southeast Asia's third-biggest economy expanded 5.6 percent on-year in January-March period, compared with 4.1 percent in the same period last year and 4.5 percent in October-December.
Uber Freight aims to connect truckers with shippers by taking piece of $256B industry
BIST 100 index falls 0.27 percent while US dollar/Turkish lira rate stands at 3.59
The White House, already reeling over a number of controversies, denied that Trump pressured former FBI chief James Comey to stop a probe into ex-national security advisor Michael Flynn over contacts with Russia.