Cyprus aims to restructure major bank by end July

NICOSIA, Cyprus (AP) The Cypriot government wants the restructuring of the bailed-out country's biggest bank to be completed by the end of this month, its spokesman said Tuesday.

Christos Stylianides said that once the restructuring is completed, management of the bank will return to its directors and shareholders.

The Bank of Cyprus had to absorb the country's now defunct second largest lender, Laiki, as part of a 23 billion euro ($30.3 billion) financial rescue deal that Cyprus agreed in March with its euro area partners and the International Monetary Fund.

With the merger, Bank of Cyprus was also forced to shoulder billions of Laiki debt which has left its cash reserves at dangerously low levels.

As a condition for receiving a 10 billion euro loan, the Cypriot government forced savers in both banks to take huge losses on deposits over 100,000 euros to cover losses at Bank of Cyprus.

Cypriot authorities also imposed restrictions on bank money transfers and withdrawals, including a daily cash withdrawal limit of 300 euros, in order to head off a run on the banks amid ebbing public trust in the financial system.

Cypriot officials say they want the restrictions lifted as soon as possible to provide much needed liquidity to a cash-starved businesses, but not before enough trust in the banks is restored. That can't happen before the Bank of Cyprus is done restructuring.

Meanwhile, the Bank of Cyprus said in a statement Tuesday that it's considering splitting its business in two one focusing on commercial banking and another on riskier, large real estate loans. The move aims to isolate the bank's core business from the higher-risk operations.

The bank said that the move will be discussed and decided on by the end of September as part of its overall restructuring plan.