Cyprus approaches Eurogroup for aid

26 June 2012 | By Rob Langston

The eurozone member believes it is at risk from its financial sector’s exposure to the embattled Greek economy, as reflected by the recent ratings action by Fitch Ratings.

Earlier, Fitch Ratings had downgraded the eurozone member to junk status over the exposure of its three largest banks to Greek corporates and households.

Jean-Claude Juncker, president of the Eurogroup, the group of eurozone countries, welcomed the approach by Cyprus.

He says: “The Eurogroup will now swiftly examine the request and will provide a formal response to Cyprus. The Eurogroup is also expected to give a mandate to the [European] Commission, in liaison with the European Central Bank, to negotiate the necessary policy conditionality, which shall accompany the financial assistance.

“This will include measures that will address the main challenges of the Cyprus economy, primarily those of the financial secto rand I expect that Cyprus will engage with strong determination the required policy actions.”

The request was made hours after Spain asked the Eurogroup for aid to recapitalise its ailing banking sector.

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