Cyprus banks may need 1.5 bln euros to recap; heavily exposed to Greece

Cyprus finance minister Vassos Shiarly said about 1.5 bln euros ($2 bln) may be needed to recapitalise the island's banking system, and this was likely to be restricted to just one bank.

Shiarly told journalists on Monday he was optimistic the bank, which he did not name, could recapitalise on its own but that the state could intervene if required.

The island's second biggest lender, Popular Bank, needs to find more than 1 bln euros in fresh capital by a mid-year deadline. Among the Cypriot banks, it is the most exposed to Greek sovereign debt and the subsequent writedown in its value. Largest lender Bank of Cyprus recently raised funds in a rights issue, but still fell short of a 1 bln euro target which it hopes to meet by June.

Shiarly said he expected the recapitalisation issue to be clarified well before the June 30 deadline set by regulators.

A senior source in Cyprus Popular Bank told Reuters last week that it wants to be considered eligible for cash that will be disbursed to Greek banks under that country's bailout programme.