Cyprus banks recap needs seen at 6-9 bln euros, says Pimco

Pimco concluded its assessment on February 2 with a baseline scenario and adverse scenario, criticised by the financial sector as well as politicians of not taking into consideration some of the unique features of the Cyprus market, such as the harsh write-down of property values, with huge real estate portfolios held by the banks.

The banks had also demanded that the Pimco report be released prior to discussions for a 17.5 bln euro bailout from the European Stability Mechanism, as they were unable to conclude their annual accounts by the end of February without considering their recapitalisation needs.

The outgoing communist government has been criticised of holding on to the Pimco report because the recapitalisation needs of the banks was not as bad as first reported, initially estimated at over 10 bln euros.

Opposition leaders had said all along that the government had sought to inflate the bailout needs simply to have enough funds to pay down its unsustainable public sector deficit just in time for the crucial presidential elections this weekend.

The state-controlled Cyprus News Agency released the summary of the Pimco report that concludes that in a baseline scenario, the Bank of Cyprus and Laiki Bank, the two hurt most by the writedown of Greek government bonds (GGBs) would need 2.834 bln and 2.782 bln euros, respectively, with the Cooperative banks a further 364 mln euros.