Bank of Cyprus to get 950m state in­jec­tion

Financial Mirror (Cyprus) - - FRONT PAGE -

Bank of Cyprus, the is­land’s for­mer fi­nance gi­ant that has been brought to its knees by a painful bailout plan fol­low­ing years of bad man­age­ment, edged closer to re­turn­ing to nor­malcy when it was an­nounced it would get a state cash in­jec­tion of EUR 950mln.

But the lender, that an­nounced EUR 31 mln in first quar­ter prof­its, is still in need of fresh cap­i­tal and is still con­tem­plat­ing plans of a cap­i­tal in­crease of up to EUR 1 bln and fur­ther as­sets sales, as pro­posed by ad­vi­sors HSBC and Credit Suisse.

The govern­ment, act­ing through the Pub­lic Debt Man­age­ment Of­fice that has been han­dling the re­cent suc­cess­ful re­turn to mar­kets af­ter a three year ab­sence, has de­cided to pay back some EUR 950 mln owed to the bank af­ter it was forced to ab­sorb the now-de­funct Laiki Pop­u­lar Bank, it­self the vic­tim of crooked bosses and state in­com­pe­tence. The amount matches the EUR 944 mln in out­flow in cus­tomer de­posits dur­ing the first quar­ter, with Bank of Cyprus de­pos­i­tors still jit­tery over the fu­ture of their sav­ings.

The re­fund is part of the EUR 1.8 bln res­cue pack­age the govern­ment threw at Laiki Pop­u­lar in 2012 and sub­se­quently na­tion­alised the is­land’s sec­ond big­gest and old­est lender, a life­line that came too late to close the black hole cre­ated by un­se­cured lend­ing and ex­ces­sive in­vest­ments in toxic Greek govern­ment bonds.

When BOCY ab­sorbed Laiki, it also un­der­took the bur­den of the EUR 1.8 bln, as well as 9.5 bln in Emer­gency Liq­uid­ity As­sis­tance that had ac­cu­mu­lated there and which the Bank of Cyprus has been pay­ing down in re­cent months.

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