Central Bank of Cyprus (CBC) will seek Troika approval to officially inform the banks about the amount needed for their recapitalization according to Pimco so that the banks will, in their turn, be able to release their preliminary results for 2012 thus informing accordingly investors.
Global investment solutions provider PIMCO has been assigned with the due diligence reiview (accounting and economic value assessment) that would determine the capital needs of the Cypriot banking system at the request of the Troika (European Commission, European Central Bank and the International Monetary Fund) as part of Cyprus’ application for financial assistance from the EU bailout mechanism.
The Steering Committee received on Feb 2 Pimco final report, the Central Bank of Cyprus had said, adding the Committee will draw up a plan which will determine the capital needs of the banking sector. The results will be made public with the signing of the Memorandum of Understanding between the Republic of Cyprus and its international creditors.
Today’s decision was taken at a meeting held at the Central Bank with the participation of the CBC Governor Panicos Demetriades, Attorney General Petros Clerides, Securities and Exchange commission (SEC) Chairwoman Demetra Kalogirou, Cyprus Stock Exchange director General Nondas Metaxas and representatives of the Ministry of Finance.
According to CNA sources, both SEC and CSE concerns over leaks of sensitive information to the media regarding the status of the companies listed on the CSE were conveyed during the meeting.
Such information includes the amount needed for the banks recapitalization based on Pimco’s scenarios, which affects investors’ decisions.
The same sources told CNA that the Attorney General pointed out that although Cypriot authorities’ concerns are reasonable, however there are obligations vis-a-vis Troika, which hamper the disclosure of Pimco’s estimations on the amount needed.
Based on the established procedure, followed by other eurozone countries that asked for financial aid, the report on the capital needs of banks should be made public immediately after the signing of the bailout memorandum.
On its part, the Central Bank advocated for transparency in such matters, which means even more safety in regard to investors.
According to the same sources, CBC will try to explain to Troika why there must be some alteration in the established procedure so that banks are informed about the amount needed for their recapitalization based on Pimco’s scenarios.
The island’s two biggest banks, the Bank of Cyprus and the Popular Bank, have already sent a request to the Cyprus Securities and Exchange Commission asking for an extension of the deadline obliging them to announce their yearly results.
As it has been revealed by CNA, the two banks argue that they cannot meet the February 28 deadline for submitting their preliminary financial statements because they have not as yet been informed about the final amount investment management firm Pimco believes it is needed for their recapitalization. Consequently, they say, anything announced by the banks might be misleading to investors.
An extension of time to the two banks can only be granted with the issuance of a relevant decree by the Minister of Finance.
