IMF: banks needs were fixed too low (Part II)

imagesCyprus officials have stated said that Russian investors were interested in buying a majority stake in Cyprus Popular Bank and increasing their holdings in Bank of Cyprus - the two biggest banks on the Mediterranean island. President Nicos Anastasiades will travel to Russia to meet President Vladimir Putin in the coming weeks to discuss possible Russian help, officials said. He will seek a five-year extension of an existing Russian loan to Cyprus of €2.5 billion (that matures in 2016) as well as a reduction in the 4.5% interest rate. Cyprus fears any "bail-in" will spark the rapid withdrawal of funds from the island and undermine its entire business model, making the economic situation even worse. Experts have warned that this could also spark panic across the Eurozone. European Central Bank President Mario Draghi is pressuring decision makers to agree on a financial aid package for Cyprus. "Cyprus is a small economy, but the systemic risks may not be small," he said. The right balance has to be found to make sure the country's debt is sustainable once it receives a bailout. "Our Union is not a transfer Union," he stated.

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