16 Jun 2012

Greek result awaited

8:01 am on 16 June 2012

Cyprus will wait until after the election in Greece before deciding how it will bail out its banking sector.

There are fears a Greek exit from the euro zone would cause the island's funding needs to explode.

Cyprus needs to find 1.8 billion euros by the end of this month to bail out Cyprus Popular Bank, the second largest bank, which saw its balance sheet ruined by a write-down in Greek government debt in March.

The government is considering applying for a bailout from the European Financial Security Fund, or a another loan from Russia, which lent Nicosia 2.5 billion euros last year.

Finance minister Vassos Shiarly said on Friday that EFSF aid was not the only option, but a decision on how to find funding would not be taken until after the result of the Greek vote.

"It is not necessary that we will seek a loan from the (EFSF). There are other options, or a combination of options," he was quoted as saying on Stockwatch, a Cypriot financial news website.

Economists estimate that banks in Cyprus could lose 10 billion euros if Greece leaves the euro zone.

Despite its problems, the government says Cyrpus is in ''a better state than the economies of many other countries in the European Union."