NICOSIA, June 26 (Reuters) - The Bank of Cyprus said on Thursday the government would repay on July 1 some 950 million euros of a sovereign bond the bank holds.
The amount represents half the value of a 1.98 billion euro bond that was among some assets transferred to Bank of Cyprus when it acquired Laiki Bank in March 2013. Cyprus had issued the bond in 2012 to prop up the now-defunct Laiki.
International lenders extended a 10 billion-euro emergency loan to Cyprus last year on condition Laiki be shut down and Bank of Cyprus re-capitalise itself from its own depositors' funds.
The government of Cyprus will use part of the proceeds from selling a 750 million-euro sovereign bond last week - the island's first foray on international markets in four years - for the bond payment.
The 1.98 billion bond was pledged as collateral with the ECB. The repayment will allow the bank to reduce its ECB funding by approximately 550 million euros.
The rest of the proceeds will be used to reduce emergency liqiduity assistance, also a legacy of Laiki, by approximately 400 million euros, Bank of Cyprus said.
The bank said it would book an accounting profit from the transaction of 95 million euros in its second-quarter results.
The board of the bank were meeting on Thursday to discuss a possible capital issue, designed to bolster regulatory capital ahead of Europe-wide stress tests later this year. (Reporting By Michele Kambas; Editing by Larry King)