He was commenting on reports that the Nomura Group, a Japanese financial services conglomerate, has approached the Central Bank governor with an offer to purchase the Greece-based operations of the three Cypriot banks, which collectively account for around 12 per cent of the banking market in Greece.

Kypri said the island’s largest lender has “reconfirmed” its longstanding policy on maintaining a presence in Greece, and that it aims to return its Greek operations to profit.

He suggested the reports were intended to damage the bank.

However, the bank has drawn up a restructuring blueprint to downsize operations in Greece through the closure of some branches and through voluntary exit packages offered to staff there.

According to BoC data, the bank’s turnover in Greece is approximately equivalent to that in Cyprus.

BoC was one of two local banks that sought state aid this year after its regulatory capital was eroded from heavy exposure to Greek debt.

Last week the bank issued a profit warning saying that group after-tax results for 2012 and before the impairment of Greek government bonds would be worse than the full results for 2011, while the Core Tier 1 ratios may even be below  the 5 per cent announced last month.

The bank posted a nine-month loss after tax of €211m euros on November 28 after including an impairment in the value of Greek bonds held and on higher provisions for non-performing loans. This followed a net loss of €793m in the nine-month period of 2011 on its Greek bond exposure.

According to European Banking Authority estimates, Bank of Cyprus's capital shortfall to reach a core tier 1 ratio of 9.0 per cent - a measure of financial strength - is €722m.

Source: Cyprus Mail