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Cyprus aims for 11.5 bln euro bailout package

Associated Press Modified: October 4, 2012 at 12:46 pm •  Published: October 4, 2012

NICOSIA, Cyprus (AP) — Cyprus is aiming to get a bailout of about €11.5 billion ($14.9 billion) from the other 16 countries that use the euro to recapitalize its troubled banks and pay its bills, officials said Thursday — significantly less than what its potential rescuers estimate it needs.

Finance Minister Vassos Shiarly has repeatedly said that Cyprus needs around €4 billion to cover expenses until 2016. But he has steadfastly refused to say how much would be needed for its banks — only that government estimates differ greatly from those of the international organizations it is currently negotiating a bailout with — the "troika" of the European Commission, the European Central Bank and the International Monetary Fund.

Two officials told the AP Thursday — on condition of anonymity because negotiations are ongoing — that the finance ministry puts banks' needs at €5 billion, while the troika puts them at €9 billion and possibly more. Cypriot banks have lost billions on their Greek bond holdings and have large loan portfolios in the debt-ridden country. The key difference between Cyprus's and the troika's estimates is what constitutes a non-performing loan, with the troika laying out stricter terms.

The Cyprus Central Bank has declined to disclose how much it would take for banks to shore up their capital base, saying only that their exact needs will be determined through a troika-supervised stress test expected to conclude in December when the government hopes to receive the first batch of bailout money as state coffers start to run dry.

The country, the eurozone's third-smallest economy with a gross domestic product of around €18 billion ($23.31 billion), originally approached the eurozone for aid in June.

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