Russia Mulling Five Billion-Euro Loan to Cyprus - Report

Russia is considering a loan of five billion euros to Cyprus, reports Nezavisimaya Gazeta, citing an advisor to the Central Bank chief Sergei Ignatiev. The Russian daily says that it's also possible that a lower amount could be granted, quoting adviser Pavel Medvedev.

Interfax has reported that the Cypriot authorities appealed for a loan of five billion amid an urgent recapitalisation drive to save Laiki Bank from failing ECB stress tests at the end of June. The loan application also comes at a time that Cyprus is considering oil and gas exploration proposals from several countries, including Russia.

Cyprus has been shut out of international borrowing markets because of high costs after a series of downgrades by international rating agencies. It has already turned to Russia for a 2.5 billion-euro loan at 4.5 percent interest per year.

The government is also considering applying to the EU for a bailout to cover Laiki Bank's 1.8 billion-euro recapitalisation needs. The bank, along with other Cypriot lenders, is heavily exposed to the Greek market and suffered losses in the billions of euros after the Greek debt haircut.

So far, there is no confirmation of either option, and another report from newswire dpa says that the Russian foreign ministry has not yet received a formal request from Cyprus.

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