Cyprus No. 2 lender Popular posts EUR 1.7 bn losses

(NICOSIA) - Cyprus Popular Bank, the island's number two lender, announced post-tax losses on Wednesday of more than 1.67 billion euros for the first nine months of 2012, sharply up on the same period of last year.

The 1.674 billion euro ($2.165 billion) loss compared with 284 million euros lost in the first three quarters of last year and came amid huge losses in Greece that have forced the bank to seek government assistance to restore its capital and the government to seek a bailout from international lenders.

"The final results of the European Banking Authority (EBA) capital exercise showed that the Bank has a remaining capital shortfall of 1.125 billion euros as of 30 June, 2012, which is being addressed through the implementation of the corresponding backstops with the explicit support of the Cyprus government," the bank said.

"This is the amount required by the bank to reach a Core Tier One capital ratio of 9% required by EBA from the ratio of 4.4% as at 30 June, 2012," it added.

Popular Bank's results were sharply worse than its larger competitor, Bank of Cyprus, which announced post-tax losses of 211 million euros for the first nine months compared with 793 million euros during the same period of 2011.

"Losses after tax and including the impairment of Greek Government Bonds for the first nine months of 2012 reached 211 million euros compared to 793 million in the first nine months of 2011, which included significant losses from the GGBs impairment of about 1.046 billion euros," a BoC statement said.

The bank asked for state assistance in June after it fell 500 million euros short in bolstering its regulatory capital as required by the European Union.

Faced with an intensifying economic recession and the sovereign debt crisis in the main markets in which it operates, the Bank of Cyprus Group focuses on strengthening its capital adequacy and liquidity, BoC said.

The Cyprus government says in principle it has accepted terms with the troika -- the European Commission, the European Central Bank and the International Monetary Fund -- for a bailout, with estimates putting the amount needed at around 17 billion euros.

EU officials say good progress has been made in negotiations but no final deal has yet been reached.

A final bailout sum will be known once an independent survey on how much Cyprus banks need to recapitalise comes up with a figure in December.

Cyprus projects its economy will slip deep into recession in 2012, shrinking 2.4 percent, and that the fiscal deficit will be 4.4 percent of GDP.

In September, the European Commission approved on a temporary basis a bailout worth 1.8 billion euros ($2.30 billion) for Cyprus Popular Bank.