Marfin Popular Bank Public Co Ltd has participated in the capital exercise of the European Banking Authority (“EBA”) in cooperation with the Central Bank of Cyprus, for restoring stability and confidence in the markets. 

The capital exercise involves 70 European banks and its objective is to create an exceptional capital buffer for banks in order to build up their capital bases and reach a 9% Core Tier 1 ratio by the end of June 2012, through the simulation of extreme and immediate haircuts in sovereign exposures.

The capital exercise was implemented according to June 2011 balance sheet data and market prices of sovereign exposures as of 30 September 2011.

The estimated additional capital buffer for Marfin Popular Bank is €2,116m. This amount is a preliminary and indicative estimate subject to alterations based on end- September 2011 data and will be revised by Marfin Popular Bank and the Central Bank of Cyprus.

The revised amount will present the base for the plans to strengthen the capital base until June 2012.

For the purpose of strengthening its the capital base, Marfin Popular Bank has already announced the following initiatives: 

• The completion of the already approved exchange offer of capital securities for an amount up to €738m, which, according to EBA, is eligible to absorb potential losses and is acceptable by EBA as capital buffer.
• The issuance of convertible securities of €660m, of which €65m have already been issued
• A deferred tax benefit of €165m 
• Other actions, include amongst others, the impact of the internally generated capital through organic profitability until June 2012 as well as the ongoing deleveraging plan, which in total are expected to enhance the capital base by €600m

The combination of all the above measures will further improve the capital position of the bank by over €2bn. 

Marfin Popular Bank is well positioned to take all the necessary measures for any required future capital needs following the conclusion of the capital exercise.

The management of Marfin Popular Bank estimates that the above developments will contribute significantly to further safeguarding the banking system, thus supporting economic stability and growth.