Popular Bank posts record H1 loss on Greece, Cyprus

Cyprus Popular Bank, the island's second largest lender nationalised after booking heavy exposure to Greece, posted record first-half losses of 1.3 billion euros on Friday after jacking up provisions at its Greek operations.

The 1.3 billion euro loss, against a 202 million loss in the first half of 2011, incorporates a goodwill impairment charge related to Greek operations. Without that charge, the bank said its net loss reached 729 million euros.

Popular was part-nationalised in June after its regulatory capital was depleted from heavy exposure to Greek sovereign debt restructured earlier in the year.

It required 1.8 billion from the state, which now has an 84% equity share in the bank.

Popular, which was until the beginning of 2011 known as Marfin Popular Bank, was the most heavily exposed of Cypriot banks to Greece's sovereign debt written down this year to make that country's debt burden more manageable.

In June, the Cypriot government sought financial assistance from the European Union to help its banks, becoming the fifth euro zone nation to require aid.

Popular said its deposits had fallen 22% on a yearly basis, mainly due to a reduction in deposits in the Greek market, to 18 billion euros. Its net loan portfolio fell 10 percent to 23.1 billion.

The bank said it increased its provisions by 384%, reflecting ongoing poor financial conditions.

On a quarterly basis, its non-performing loans in Cyprus rose 4.15 percentage points to 13.6% of its total loan book in the second quarter of 2012 and to 32.6% in Greece, a 9.89 percentage points increase.