Citing reliable sources, the Cyprus News Agency said that while in London Demetriades will have talks with potential investors willing to take a stake in Cypriot banks, which have suffered a heavy blow following the Greek sovereign debt write-down in October 2011. Excluded from international markets, Cyprus requested financial assistance after its two largest banks sought state aid following massive write-downs of the Greek bond holdings estimated at €4.5 billion.
Cypriot authorities and international lenders have agreed in principle on a Memorandum of Understanding containing the terms of the financial assistance programme estimated at €17.5 billion, which is equal to the country`s GDP. In the context of the Cypriot application, the authorities commissioned a US investment consultancy firm to carry out a due diligence review of the Cypriot financial sector. PIMCO delivered its final report containing the capital needs on the basis of a baseline and an adverse scenario on February 2.
A reliable source has told CNA that the capital shortfall of the financial institutions which were included in the review reaches €5.98 billion in the baseline scenario, whereas the shortfall in the adverse scenario rises to €8.66 billion.
Source: Cyprus Mail