Cyprus says banks safe, will intervene if needed

NICOSIA, Oct 7 (Reuters) - Cyprus said on Tuesday its banking system was safe, but added it would immediately step in to protect depositors and banks in the event of a crisis.

EU finance ministers agreed to increase the minimum level of bank deposit insurance across all 27 member states on Tuesday to bolster faith in savings and to recapitalise any critical bank if needed.

"The Republic of Cyprus endorses this agreement and states it is ready to intervene, if required, to support and protect its banking system and depositors," Cypriot Finance Minister Charilaos Stavrakis, who attended the meeting in Luxembourg, said in a written statement issued in Nicosia.

Cypriot finance and Central Bank officials have repeatedly said the island's banking system is safe and largely immune to the turmoil which started in the U.S. and spread to Europe.

"I want to state one more time that the Cyprus banking system is healthy. In the remote case that any problem is encountered, and in the scope of the parameters agreed (by EU finance ministers) we will immediately take the required measures to fully support the system and depositors," Stavrakis said. (Writing by Michele Kambas, editing by Swaha Pattanaik)