Cyprus makes eurozone quintet

The Cypriot government issued a brief statement late on Monday saying that it intended to ask its European partners for lower-interest loans and had set the wheels in motion.

"The government of the Republic of Cyprus has today informed the appropriate European authorities of its decision to submit to euro area member states a request for financial assistance," the statement, released by the country's EU embassy in Brussels, said.

The initial statement neither said how much money would be requested, nor whether the money was for the Cypriot government or for the country's banks. The paper did say that the request was a result of "negative spillover effects through its financial sector, due to its large exposure in the Greek economy."

Government spokesman Stefanos Stefanou said the amount of money was up for negotiation over the coming days. European Union leaders meet for their monthly summit in Brussels on Thursday.

The Cypriot statement came just hours after Spain formally submitted its request for loans to refinance its wobbly banks, becoming the fourth eurozone country to ask for some form of aid.

Downgraded

Cyprus takes over the EU's rotating presidency for six months on July 1. Ratings agency Fitch had also downgraded Cypriot sovereign debt by one notch earlier on Monday, a move that had been long expected.

"This is principally due to Greek corporate and households exposure of the largest three banks, Bank of Cyprus, Cyprus Popular Bank and Hellenic Bank, and to a lesser degree the expected deterioration in their domestic asset quality," Fitch said of its decision to move the rating from BB+ to BBB-.

Cyprus procured a low-interest loan from Russia earlier this year that is thought to have helped the country delay its request for European aid, spokesman Stefanou said the country might yet seek further bilateral loans from countries like Russia or China, along with its European request.

msh/rc (AFP, AP, dpa)