Cyprus & World News

Cyprus Pimco report out but results not public till March

02 February, 2013

The Central Bank of Cyprus announced on Saturday that the Steering Committee of Cyprus has now received the final report on the diagnostic test for the capital needs of financial institutions in Cyprus from Pimco and Deloitte.
However, the results will not be made public for over a month.
“The results of the report will be made public when the Memorandum of Understanding is signed between the Republic of Cyprus and the international creditors,” said the Central Bank in a statement.
The signature of the MoU is not expected until March, after the presidential elections on 17 and 24 February and the inauguration of the new president.
The Central Bank added that by the time the MoU is signed a detailed plan determining the needs of the banks will have been drawn up.
Pimco’s initial estimate for bank recapitalisation needs was reportedly put at EUR 10 bn but this spooked the IMF, which worried that this would push the debt level to unsustainable levels.
The latest rumours suggest that Pimco’s baseline scenario is for recapitalisation needs of EUR 8.7 bln with 10 bln representing the worst-case scenario. That would mean that the total bailout including assistance to help the government roll over maturing debt would amount to EUR 16.2 bln instead of an estimated EUR 17.5 bln previously.
Cyprus applied for a bailout at the end of June 2012 and came to an in principle agreement with its creditors (the troika) in mid-November. Parliament then passed a raft of austerity measures and other laws demanded by the troika almost unanimously in December.
The Steering Committee, which appointed PIMCO, comprises the European Commission, the European Central Bank, the European Stability Mechanism, the International Monetary Fund, the European Banking Authority, the Ministry of Finance, the Central Bank of Cyprus, and representatives of the supervision the cooperative societies.