Cyprus requests bailout loan from its eurozone partners

Cyprus announced late yesterday that it had requested assistance from its eurozone partners, becoming the fifth out the 17 countries that share the euro to seek a rescue.

“The government of the Republic of Cyprus has today informed the appropriate European authorities of its decision to submit to euro area member states a request for financial assistance,” read a statement released by the Cyprus government.

The statement did not specify a figure for the requested aid although local media speculated it would be in the region of €5 billion.

Neither did it state whether it was seeking a government bailout or funds to recapitalise its banks, but the statement said the request for help was a consequence of a Greek debt write-down that hurt its financial institutions. The Cyprus government has always insisted the only financial help they need was to help the relatively large banking system recapitalise against a worsening of the euro crisis.

An EU diplomat said last week that Cyprus would first ask Russia for a loan of up to €5 billion, having already secured a €2.5 billion low-interest loan from Moscow to cover its refinancing needs for this year.

Cyprus thereby follows Greece, Ireland, Portugal and Spain in formally asking for help from the eurozone.

The Cypriot government said that a write-down of Greek bonds which hit its banks hard pushed it to seek help.