Cyprus said on Friday it would help its Greek-exposed banks to boost their capital if their own efforts fall short, but acknowledged that its capacity to assist was constrained by the country's own fiscal difficulties. Finance Minister Kikis Kazamias said support to the banks could be extended only after they have made exhaustive efforts to raise fresh capital themselves, which should include disposal of non-core assets and cutting salaries and dividend payouts.
There has been growing speculation that Cyprus, which represents just 0.2 percent of the euro zone economy, could need a bailout to ease the burden of its bank's exposure to Greece, fiscal difficulties which have been gradually mounting and a loss of access to international capital markets. "I want to stress that any recourse to the European support mechanism is for us the very last resort and efforts must be made to avoid that," Kazamias said in a prepared text of remarks at an economic conference in Nicosia.