NICOSIA: Cyprus will wait until after Greece's cliffhanger vote to decide how it will bail out its banking sector, its finance minister said yesterday, amid fears a Greek exit from the euro zone would cause its funding needs to explode.
The island nation, whose banks are highly exposed to the debts of its larger neighbour Greece, is closely watching the outcome of tomorrow's Greek election, which European leaders fear could lead to Athens eventually leaving the euro zone.
Cyprus already needs urgently to find 1.8 billion euros ($2.28bn) by the end of this month to bail out its second largest bank, which saw its balance sheet ruined by a write-down in Greek government debt in March. Were Greece to leave the euro, Cypriot banks would face problems many times as large.
Cyprus has been considering options including a bailout from the EU rescue fund or a bilateral loan, perhaps from Russia, which already lent Nicosia 2.5bn euros last year.
Finance Minister Vassos Shiarly said a decision on how to find funding would not be taken until after the Greek vote result.