Cyprus banks may need further $2 billion of capital: Moody's

NICOSIA Thu Oct 3, 2013 1:17pm IST

A depositor waits to enter a Laiki Bank branch in Nicosia March 28, 2013. REUTERS/Yannis Behrakis

A depositor waits to enter a Laiki Bank branch in Nicosia March 28, 2013.

Credit: Reuters/Yannis Behrakis

NICOSIA (Reuters) - Cypriot banks could need a further 1.5 billion euros ($2 billion) of capital to cope with a rise in bad loans in a rapidly contracting economy, credit rating agency Moody's Investors Service said on Thursday.

Moody's said the Mediterranean island's banks and cooperative lenders were likely to need the money on top of the 2.5 billion euros of EU support already earmarked for the banking sector.

Cyprus shut one its largest banks and forced depositors to forfeit savings to recapitalize a second bank in March, as part of a 10 billion euro aid package from international lenders after the country was hit by the euro zone debt crisis.

Moody's, which put Cypriot banks on a "negative" outlook in May 2009, said in a report it anticipated a 12 percent contraction in economic output this year, considerably worse than lenders' estimates of an 8.7 percent decline.

The agency estimated that problem loans increased to around 26 percent of gross loans at the end of 2012, and would increase to over 35 percent by the end of this year. It did, however, say there was limited publicly available data on the matter.

(Writing by Michele Kambas; Editing by Mark Potter)

Politics

REUTERS SHOWCASE

Fund Raising

Fund Raising

Flipkart raises $700 million in fresh funding.   Full Article 

Reforms Push

Reforms Push

Modi may order insurance, coal reforms if vote delayed - officials.  Full Article 

Reuters Exclusive

Reuters Exclusive

India looks to sway Americans with nuclear power insurance plan  Full Article 

To Boost Growth

To Boost Growth

Crank up public spending to revive growth - chief economic adviser.   Full Article 

Bold Steps

Bold Steps

SpiceJet rescue plan marks bold bet on Indian aviation recovery.   Full Article 

New Airline

New Airline

Tata, Singapore Air venture Vistara to take off on Jan 9.  Full Article 

Online Sales

Online Sales

Knock knock. Who's there? Amazon's best-selling holiday author.  Full Article 

Hacking Attack

Hacking Attack

N.Korea says did not hack Sony, wants joint probe with U.S.  Full Article 

Reuters Poll

Reuters Poll

BSE Sensex to hit 32,980 by December 2015  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage