NICOSIA– The Governor of the Central Bank of Cyprus Panicos Demetriades is in London for contacts with possible investors in the Cypriot banking sector. Reliable sources have told CNA that while in London Demetriades will discuss with possible investors willing to take a stake in the Cypriot banks, which have suffered a heavy blow following the Greek sovereign debt haircut. Excluded from international markets, Cyprus requested financial assistance from the European Stability Mechanism, after its two largest banks sought state aid following massive write downs of the Greek bond holdings estimated at €4.5 billion. The Cypriot authorities and the Troika agreed in principle on a Memorandum of Understanding containing the terms of the financial assistance programme estimated at €17.5 billion, which is equal to the country`s GDP.
In the context of the Cypriot application, the authorities commissioned a US investment consultancy firm, Pimco to carry out a due diligence review of the Cypriot financial sector. The US firm delivered its final report containing the capital needs on the basis of a baseline and an adverse scenario on February 2.
A reliable source has told CNA that the capital shortfall of the financial institutions which were included in the review reaches €5.98 billion the baseline scenario, whereas the shortfall in the adverse scenario rises to €8.66 billion.
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