Lenders to wait more for recapitalization

The process of recapitalizing banks that took part in the private sector involvement (PSI) plan is in danger of being postponed by at least one month, as all crucial decisions that need to be made by the government on the way the recapitalization will materialize, the rights and the buy-back price have been put off until April, while impending early elections are threatening to delay the process even further.

While local lenders have seen with a degree of uneasiness this week the failure of Bank of Cyprus to raise as much capital as it had planned for, the recapitalization process is eagerly anticipated for banks to breathe some fresh air.

The original timetable provided that by end-February the final provisions about loans would have been ready and that by end-March the government would have defined all the terms of the process, so that the accounting reports for 2011 could be published with considerable losses but without shaking the credit system.

However, in the past month since the law for the framework of the process was voted through, nothing has been done, adding to the industry’s worries.


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