European development bank to get stake in Cypriot bank

NICOSIA, Cyprus (AP) — The European Bank of Reconstruction and Development has agreed to acquire a 5.4 percent stake in Hellenic Bank, Cyprus' second-largest lender, for 20 million euros ($22.4 million) in newly-issued shares.

EBRD official Lucyna Stanczak-Wuczynska said after the deal was signed Wednesday that the acquisition aims to further stabilize bailed-out Cyprus' banks, which are saddled with bad loans amounting to more than half of all loans.

Cyprus' banking sector was hit hard after international creditors threw the country a 10 billion euro ($11.2 billion) lifeline in March, 2013 that required a seizure of uninsured deposits in its two biggest banks.

Stanczak-Wuczynska said the EBRD will help Hellenic Bank tackle its bad loan problem so that it could lend more to businesses.

More lending would, in turn, boost economic growth.