Cyprus' Marfin Popular Bank said Wednesday that it's being courted by several strategic investors despite posting a huge loss of euro2.5 billion ($3.36 billion) for 2011 after taking a 60 percent writedown of its Greek government bond holdings.
The island's second largest lender said that it would need euro1.35 billion ($1.82 billion) to meet the required capital buffer of 9 percent, according to a capital raising plan submitted to regulators.
"Yes, there is interest from foreign strategic investors. I can say that from some, the interest is serious. But, there's nothing that we can announce at this moment given the sensitivity of the matter," Bank CEO Christos Stylianides told a news conference.
The bank said in a statement that interest from the unnamed investors would "be clarified over the next few months" so that it can meet the 9 percent capital threshold by June.
It said it also plans to raise cash from shareholders through a rights issue or private placement.
Stylianides said the bank would shut about 35 branches in Greece and Cyprus _ most of them in Greece _ to further curtail costs, but wouldn't say whether this would mean layoffs.
He added that the bank would drop "Marfin" from its name and revert to Cyprus Popular Bank, its name prior to it's 2006 merger with Greece's Marfin and Egnatia banks.
Bank Chairman and former Cyprus finance minister Michael Sarris conceded that the bank has tightened lending restrictions given its plans to raise its capital base.
Discounting the writedown, the bank said it managed to make a profit euro338 million ($454.75 million) last year _ an increase of 3.2 percent over the previous year.
Marfin Popular is the most Greece-exposed of the island's three biggest commercial banks, holding Greek bonds with a nominal value of a little over euro3 billion ($4 billion).
The bank said its Greek bond writedown amounted to euro1.97 billion ($2.65 billion).
The Bank of Cyprus, the island's largest, last week posted an after-tax loss of euro1.01 billion ($1.34 billion) for 2011, after including a 60 percent writedown on its Greek government bond holdings.
That exposure of the large Cypriot banking system _ equivalent to six times Cyprus' euro18 billion ($24.2 billion) gross domestic product _ is primarily responsible for bringing the island's credit rating to near junk status.
That, in turn, effectively locked Cyprus out of international markets, forcing it to turn to Russia for a euro2.5 billion ($3.36 billion) low-interest loan to meet its financing needs for this year.