Cyprus to underwrite 1.8 bln eur Popular Bank issue

The Cyprus government decided Thursday to fully underwrite a 1.8 bln euro preference rights issue by the Popular Bank, which the island’s second largest lender said will help “recapitalise the bank through private capital”.
Details of the state support were not revealed, but the bank said the terms of the issue will be submitted to the Securities and Exchange Commission and were expected to be disclosed in the coming week.
The Popular Bank reported record losses of 2.8 bln euros last year, mainly due to a 2.3 bln euro writedown in the value of its Greek government bond holdings.
The European Banking Authority (EBA) said Popular needs to raise 1.97 bln euros by next month to replenish its core Tier 1 capital to 9%. The bank recently announced a convertible bond issue, while operational cutbacks, disposal of assets and an improvement in 2012 profits should help it improve its financial strength.
Finance Minister Vassos Shiarly has reiterated in recent statements that the bank was “safe”, despite a run by some customers to withdraw deposits.