Cyprus is increasingly likely to seek European aid to deal with the impact of the Greek crisis on its own banking system, the country’s central bank governor has told the Financial Times.
Panicos Demetriades acknowledged in an interview that with a deadline of the end of this month to find at least 1.8 billion euros ($2.2 billion) to recapitalize Cyprus Popular Bank , the country’s second largest lender, recourse to the European Union was becoming more probable. “Clearly the closer you get to the deadline the less unlikely it becomes,” he said, adding that the country was facing “an important crunch time.”
Michalis Sarris, Popular Bank’s chairman, also suggested the country had little alternative. He told the FT: “It is hard to see where [the capitalization] is coming from, if not Europe,” noting that “appetite to lend to Cyprus has dried up for many months now.”
Seeking emergency EU funds would be a bitter reversal for a country that until now has rejected European assistance, preferring instead to borrow from Russia, and which assumes the presidency of the 27-nation bloc next month.
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