Cyprus banks agree to join Greek debt swap

The three main lenders in Cyprus – Bank of Cyprus, Marfin Popular Bank and Hellenic Bank – said in a joint announcement issued Wednesday that they will take part in the voluntary swap of Greek debt.
"Bank of Cyprus's board of directors decided unanimously in a meeting today that the bank will take part in the voluntary Greek bond swap," the island’s largest lender said.
Marfin Popular also said it would take part in the exercise, adding to a growing list of banks that have announced their participation ahead of Thursday night's deadline.
Marfin is the most exposed among Cypriot banks to Greek debt, with sovereign bonds worth about 3 bln euros, while Bank of Cyprus holds about 2 bln euros. Both said in their financial statements they would provide for a 60% impairment on their Greek debt holdings, pushing their 2011 losses to record highs.
The smaller Hellenic Bank said it’s exposure to Greek debt is a mere 110 mln euros.
The finance minister and the Cyprus central bank governor said last week they were confident that the island's banks would do their utmost to meet enhanced capital requirements this year.
Regulators say Marfin Popular requires an additional 1.35 bln euros ($1.8 bln) to meet a Core Tier 1 level of 9% by the end of June. Bank of Cyprus would require around 400 mln euros, a level the bank says it will meet through a rights issue.
"The Central Bank has full confidence in the banking system and we do not consider there is any reason for concern,” said Athanasios Orphanides, governor of the Cypriot central bank and a member of the ECB Governing Council.