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.
Overnight lending rate gets cut by 25 points to 8.50 percent; overnight borrowing rate remains unchanged at 7.25 percent
"It appears that a programme of public spending in Germany would not be the most appropriate tool to help give a strong stimulus to the international economy," the central bank said following a study into the issue.
The 0.3 percent quarterly gain was in line with average forecasts compiled by data company Factset.
Qatari Ambassador to Ankara says bi-lateral trade could double through committment to undertake further investments in Turkey
Radical cleansing will start a new era in Turkey, says the head of the Turkish Cooperation and Development Agency (TIKA)
EU Commissioner for Jobs, Growth and Investment and Competitiveness Jryki Katainen told reporters "we should forget this phrase" when asked if that meant granting market economy status to China.
Militancy has reduced revenue from oil industry by half, senior official says
The grant was signed Monday in Nairobi to mitigate impact of forced displacements on refugee hosting communities in East Africa
The EU Trade Commissioner Malmstrom made the comment while speaking to Chinese students in Beijing ahead of a China-EU summit.
Trade Ministers Meeting in Shanghai concludes with pledge to push efforts toward trade liberalization and facilitation
Brexit raises uncertainty for consumer, investor confidence, ratings agency says
Bank of England Governor Mark Carney eases lending rules after vote for Brexit
Banca Monte dei Paschi di Siena, or BMPS, is among the banks at the forefront of those concerns with gross bad loans amounting to 46.9 billion euros ($52 billion).
Fund to be used in support of education, health, municipal, socio-economic support for refugees in Turkey