Greece 'ready' to absorb Cyprus bank subsidiaries

Athens is "ready" to absorb the subsidiaries of three Cyprus banks active in Greece, the Greek finance minister said as the eurozone sought to amend a controversial levy on the island nation's bank deposits.

"We stand ready to take over the assets and liabilities of Cypriot branches in Greece," Finance Minister Yannis Stournaras said.

Cypriot bank subsidiaries in Greece are exempt from the levy, Stournaras added.

Greek stocks dropped 2.87 percent in midday trade on Tuesday with bank shares down 5.56 percent.

There are three Cypriot banks with subsidiaries in Greece: the Bank of Cyprus, the Hellenic Bank and the Cyprus Popular Bank (CPB).

A Greek banking source said "around a billion euros" would be required to finance the takeover for the three subsidiaries which have deposits of around 14.6 billion euros ($18.9 billion) in Greece.

Greece's top three banks and the state-owned postal bank have all expressed interest in a possible purchase, the source told AFP.

"National Bank, Alpha Bank, Piraeus Bank and Hellenic Postbank have expressed interest," the bank source said.

But further developments depended on a crucial vote on the bailout by the Cypriot parliament as the island's bankers were "reluctant" to sell, the source said.

Under the original terms of a 10-billion euro ($13 billion) bailout package from the eurozone, all holders of bank accounts in Cyprus were to be hit by a one-off levy ranging from 6.75 percent to 9.9 percent.

On Tuesday, French Finance Minister Pierre Moscovici said the eurozone had "unanimously" agreed to scrap the controversial levy on deposits below 100,000 euros for a bailout to the debt-hit nation.

All Cypriot subsidiaries in Greece were closed on Tuesday -- the first day of business after a religious holiday on Monday.

The Athens stock exchange said it had also temporarily suspended trading in Bank of Cyprus and CPB shares.

The upheaval came just a few days after newly-elected Cyprus President Nicos Anastasiades visited Greece last week to reportedly request financial assistance.

As part of its own EU-IMF rescue package reached last year, Greece obtained a partial reduction in debt owed to private creditors -- which included Cypriot banks.

Anastasiades' incoming administration wanted this taken into account during talks with international creditors for the Cypriot bailout.

At the time, Cyprus media reports had said Anastasiades would ask Athens to offer the recession-hit island up to three billion euros to help bail out its banks and ease the expected EU financial aid package.

Cypriot daily Phileleftheros had said this could be done by ring-fencing operations in Greece by Cypriot lenders so they could then receive Greek rescue cash.