Cyprus and Lebanon to explore deepening financial ties

LIMASSOL, Cyprus, Feb 14 (Reuters) - Banking regulators from Cyprus and Lebanon said on Friday they would explore ways to strengthen financial links between the two countries, including trade finance.

Bankers from both countries said Lebanese banks were well placed to expand in Cyprus, which has had a liquidity crunch since an international bailout in March 2013 shut down a major bank and imposed losses on large depositors in a second lender.

With branches of nine Lebanese banks and four more as subsidiaries, Lebanon has the largest national grouping of banks on the eastern Mediterranean island.

"Lebanon has historical ties with Cyprus, with Lebanese businessmen well established and with offices here," said Riad Salameh, the Lebanese central bank governor.

"We think this can offer further synergies in the banking sector, and the Lebanese banks here can play a role on the island or though establishing correspondent or syndication relations with Cypriot banks," he said.

Speaking on the sidelines of a conference, Cypriot central bank governor Panicos Demetriades said close ties between the two countries could benefit Cyprus.

"It could help support trade finance, which has been a problem in recent months for companies. In terms of project financing, which is perhaps a longer term issue, Lebanese banks could help in re-activating the Cypriot economy and the economic recovery of Cyprus."