The government announced on Monday it has acquired shares totaling 1.79 billion of Cyprus Popular Bank, in an effort to assist its recapitalization efforts.
Cypriot banks have been severely hit by a 76% write down of their Greek bond holdings as a result of the Greek sovereign debt haircut and have announced capital raising plans in March 2012 and November 2011 respectively, with a liability management exercise and a rights issue as their main components.
The government has decided to act as an underwriter of a 1.8 billion euro capital issue by CPB.
“Taking notice of the amount of shares subscribed by private investors and in line with the Decision of the Council of Ministers of 17 May 2012 for the underwriting of the rights issue of capital of an amount of one billion and eight hundred million euro (1.800.000.000 euro) by Cyprus Popular Bank, the Government acquired EUR one billion seven hundred and ninety six million nine hundred and eighty six thousand four hundred and thirty nine ( 1.796.986.439 euro) of shares in the bank,” the Finance Ministry said in a press release, adding that “the capital strengthening plan of Bank of Cyprus resulted in an increase of share capital by EUR 592 million.”
The Ministry also notes that “the Government of Cyprus remains firmly committed to ensuring the stability of the financial sector and will work in close cooperation with the European Commission (EC), European Central Bank (ECB) and International Monetary Fund (IMF) in the framework of an international assistance programme.”
“Banks’ capital needs will be assessed after a thorough examination of their assets and in respect of EU state aid rules. The commitment of the Government of Cyprus, as backed by European Commission, European Central Bank and International Monetary Fund under the assistance programme, is to support banks` compliance with the regulatory framework,” the Ministry concludes.
