February 24, 2014 / 10:47 AM / in 4 years

EU regulator clears Cypriot cooperative banks' overhaul plan

BRUSSELS, Feb 24 (Reuters) - The European Union state aid regulator cleared on Monday a 1.5 billion euro ($2.06 billion) recapitalisation and restructuring plan for a group of Cypriot cooperative banks which found themselves in trouble due to a high volume of bad loans.

“The measures will enable the cooperative banking sector to become viable in the long term without continued state support, while limiting the distortions of competition created by the aid,” the European Commission said in a statement.

The EU executive said the overhaul includes reducing the number of cooperatives to 18 via mergers, the implementation of adequate risk management and loan underwriting policies and spinning off non-performing loans to a new specialised unit.

$1 = 0.7275 euros Reporting by Foo Yun Chee, editing by Robert-Jan Bartunek

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