Cyprus bailout for banks seen at 10 bln; consolidation ahead

Cyprus has made preliminary plans to take up to 10 bln euros from international creditors to recapitalise the island's struggling banks, its central bank governor said on Friday.
Cyprus is now awaiting an interim report from consultants on the capital needs of its banking sector, anticipated by December 7, one part of a bailout analysts believe could total as much as 17.5 bln euros.
Some 6 bln euros is earmarked to rollover government debt and a further 1.5 bln will be needed to pay immediate costs and public servants wages.
Asked what had been tentatively established as a recapitalisation amount for the banks in a preliminary agreement with the EU and IMF, Governor Panicos Demetriades told journalists: "Nobody actually knows for sure. A figure has been put on the draft MOU ..we can say up to 10 billion euros."
Demetriades also suggested that local banks, heavily exposed to Greek sovereign and private sector debt, ought to consider consolidation plans further ahead of a due diligence report from global fund manager Pimco.
Already, the island’s two largest banks – Bank of Cyprus and part-nationalised Laiki Popular Bank – announced cumulative losses of about 2 bln euros for the nine-month period of January-September, while smaller Hellenic Bank, a conservative lender controlled by the Church of Cyprus, showed a small profit of 220,000 euros, a significant turnaround from the 73 mln in losses it announced for the three quarters of 2011.
Governor Demetriades also avoided to comment on a press report that alleged that the major shareholder and chief executive of then-Marfin Laiki Bank – Andreas Vgenopoulos and Efthymios Bouloutas, respectively – were responsible for some 2.5 bln euros worth of investments in Greek sovereign bonds. But he sufficed to say that the central bank was aware of the report from last May when he was appointed Governor, and that he was waiting for the consultants (Alvarez & Marsal) to perform specific investigatory services related to banks that have sought state-aid, before the Cyprus authorities took any civil or criminal action.