June 13, 2012 / 3:14 PM / 7 years ago

Cyprus may seek up to 4 billion euros if goes to EU

DUBLIN (Reuters) - Cyprus could seek up to 4 billion euros in financial aid if it turns to the European Union for help, but needs an immediate 1.8 billion euros to recapitalize one of its banks in the next few weeks, its deputy Europe minister said on Wednesday.

Andreas Mavroyiannis told Reuters on a visit to Ireland that no decision had yet been taken about how to bail out his country’s hard hit banking system but that a loan would involve Europe in some way.

But he said Cyprus could get help from Russia and/or China and that their aid may even be mixed with European funds.

“Everything is on the table,” he said. “It can be a combination (of bilateral and European money). Whatever it is it will have a part of European - money or conditionality.

“I don’t know if it will be Russia or China,” he said.

Euro zone member Cyprus has been shut out of capital markets for more than a year, with many of its banks overexposed to the Greek debt crisis.

It must find the equivalent of 10 percent of its gross domestic product by June 30 to recapitalize Cyprus Popular Bank if no private investor comes forward.

Mavroyiannis said that borrowing money from the European Union carried baggage with it that bilateral loans did not.

“The problem with going through the (European bailout) mechanism is that it received a very negative connotation because of what happened in Greece,” he said.

“Politically, when you say you are going into a mechanism people consider that there is something that is very negative. Politically, the government tries to avoid to have to bear this negative effect.”

He nonetheless said that Cyprus would stick to its EU obligations.

“The money can come from outside, but you need to operate within the framework of the Union,” he said.

Mavroyiannis said that were Cyprus to tap the EU bailout fund for aid it might ask as a safety buffer for more than the 1.8 billion euros it currently needs.

“We are talking about figures that could be 3 or 4 (billion euros) maximum,” he said.

Reporting by Conor Humphries. Editing by Jeremy Gaunt.

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