Cyprus officials confident on banks’ recap

The finance minister and central bank governor of Cyprus said on Wednesday they were confident that the island's banks, which reported heavy losses on Greek sovereign debt exposure, would do their utmost to meet enhanced capital requirements this year.
"We anticipate banks will implement their plans which stipulate they will use all opportunities at their disposal to raise capital from the private sector, starting from existing shareholders, and by also attempting to attract new shareholders," Finance Minister Kikis Kazamias told reporters.
Regulators say Marfin Popular Bank requires an additional 1.35 billion euros ($1.8 billion) to meet a Core Tier 1 level of 9% by the end of June.
Bank of Cyprus would require around 400 million euros, a level the bank says it will meet through a rights issue.
Cypriot banks have been slapped with record losses from impairment in the value of their Greek debt holdings.
Authorities recently introduced legislation allowing the issue of government securities in exchange for private equity.
Marfin Popular, which earlier Wednesday reported a record 2.5 billion euro loss after taking a 60% writedown on its Greek debt holdings, said it planned a 1.35 billion euro equity issue.
It said it would be offered either to existing shareholders or to investors via a private placement, or both .
It also said it had received interest from a number of "credible strategic investors" but did not elaborate.
Bank of Cyprus, which posted a 1.0 billion euro net loss last year, is plugging its own shortfall via a voluntary exchange of convertible enhanced capital securities with ordinary shares of up to 600 million euros and a rights offering to raise 397 million euros.
"We find these plans satisfactory," said Athanasios Orphanides, governor of the Cypriot central bank and a member of the ECB Governing Council.
"The Central Bank has full confidence in the banking system and we do not consider there is any reason for concern."