Cyprus, the fifth euro area member to request an international rescue, may have to wait several months before it receives a bailout from the so-called troika of the International Monetary Fund, the European Commission and the European Central Bank, business groups said.
“They pay a lot of attention to the recapitalization of the banks,” Michael Pilikos, director general of the Cyprus Employers and Industrialists Federation told reporters in Nicosia today, after meeting representatives of the so-called troika. “They told us it is an issue they have not reached any conclusion yet and may need some months to investigate. It is a very complicated issue and their venture will not be that easy”.
Phidias Pilides, chairman of the Nicosia-based Cyprus Chamber of Commerce and Industry who was also a participant in the meeting, said that delegates of the troika visiting the east Mediterranean island for the second time since it asked for a bailout on June 25, will need time to establish the “exact magnitude of the problems of the banks”.
Cypriot banks lost more than 4 billion euros ($4.9 billion) in Greece’s debt restructuring earlier this year. The government of the island, the euro area’s third-smallest economy which was shut out of markets more than a year ago, had to rescue second largest lender Cyprus Popular Bank PCL in May by underwriting its 1.8 billion euros capital increase.
On June 27, Bank of Cyprus Plc (BOCY), the island’s largest lender, also requested 500 million euros in temporary aid to meet regulatory requirements.
“We are not going to have a memorandum before October,” said Pilides, adding that the troika delegates did not mention any timetables. “Every delay causes worsens the situation of the economy considerably”.
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