Eurogroup President Jean-Claude Juncker has said that he welcomed the formal application for financial assistance that he received from Cypriot authorities.
The Eurogroup will now swiftly examine the request and will provide a formal response to Cyprus, he said in a statement late on Monday.
The Eurogroup is also expected to give a mandate to the Commission, in liaison with the ECB, to negotiate the necessary policy conditionality, which shall accompany the financial assistance. "This will include measures that will address the main challenges of the Cyprus' economy, primarily those of the financial sector and I expect that Cyprus will engage with strong determination in the required policy actions," the statement added.
Cyprus on Monday formally requested financial assistance from the euro area's bailout funds to shore up its banks struggling from exposure to debt-ridden Greece.
Although the government of Eurozone's third-smallest economy did not specify the amount involved, it is reported that Cyprus Popular Bank, the country's second largest lender, faces a deadline to find at least EUR 1.8 billion, equivalent to about ten percent of the nation's GDP, for recapitalization at the end of June.
Nicosia's request for financial assistance comes within hours of Spain formally requesting a bailout from the European Union to shore up its ailing banking sector.
Cyprus is the fifth Eurozone country to seek a bailout loan from its partners in the single currency union to address its financial woes. Fellow Eurozone nations like Greece, Ireland and Portugal have already availed such loans. Earlier on Monday, Fitch Ratings lowered the credit ratings of Cyprus to junk status, citing an increase in the capital required to be injected into the country's banks. The agency maintained the outlook at 'Negative.'
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