Cyprus, which applied for an EU bailout last week, acquired 1.79 billion euros ($2.3 billion) worth of shares in the island's second-largest lender, in a previously announced move to help it meet minimum capital levels depleted by heavy exposure to debt-crippled Greece.
The finance ministry said on Monday it had bought the shares in Cyprus Popular Bank CPBC.CY, after the state pledged on May 17 to underwrite Popular's attempt to raise 1.8 billion euros in equity.
Cyprus, which assumed the rotating EU presidency on July 1, became the fifth euro zone member to seek a financial lifeline from its European partners last week.
A team from the European Commission, the IMF and the European Central Bank were expected to start consultations with authorities on Tuesday.
Cyprus's banking system has been heavily exposed to Greece, with Popular and Bank of Cyprus BOC.CY posting mammoth losses on writedowns of Greek sovereign paper, agreed by European leaders to make Greece's debt pile more manageable.
The cost to bail out both banks, at about 2.3 billion euros, represents a sizeable chunk of Cyprus's 17.3 billion euro economy and one the island can ill afford while it is shut out of international debt markets.

reporternet.com