WITHIN this week, authorities will appoint the members of a steering committee that will select an international firm to audit the loan portfolios of the island’s three big banks as well as those of two Greek subsidiaries and a representative sample of cooperatives, it was reported yesterday.
The Cyprus News Agency said the 10-member committee will select the firm that will carry out diagnostic checks on the loan portfolios of the Bank of Cyprus, Popular, and Hellenic as well as Greek subsidiaries Alpha and Eurobank.
A representative sample of cooperative banks will also be audited, CNA said.
Financial portal Stockwatch said the cooperatives could include large cooperatives like the Limassol Cooperative Savings Bank, and the Strovolos and Makrasyka Cooperatives. It would also include smaller cooperatives of professional bodies like the teachers and the police.
The committee will be made up of five local members and five from the Troika, CNA said.
The audit is expected to be complete by October.
“We should know the exact capital needs of the Cyprus banking system beginning of November,” CNA said, quoting an unnamed state source.
The source said the terms of reference are almost complete – the selection procedure for a firm “would take another week or two at the latest.”
Various figures have been floating around ever since Cyprus applied for a bailout on June 25.
Last week, ratings agency Standard and Poor’s said the island’s bailout would reach €11 billion – just over 60 per cent of GDP -- to recapitalise its banks, absorb further bank losses, and meet 2012-2014 borrowing requirements.
About €6.6 billion or 36 per cent will be absorbed by the state to cover maturing debt and underlying deficits during 2012-2014, S&P said.
Cyprus's two main banks suffered heavy losses from a write-down of Greek sovereign debt earlier this year which was backed by all EU member states, including Cyprus.
Popular and Bank of Cyprus racked up huge losses on their holdings of Greek sovereign debt, causing a €2.3 billion combined shortfall in their regulatory capital they asked the state to fill.
