Cyprus is only a step away from applying to the European Union (EU) for bailout support to help recapitalize the island's second largest bank, Finance Ministry sources said on Tuesday.

A government spokesman said that no decision has yet been made, but the Finance Ministry sources said on condition of anonymity that an application may be imminent.

The conflicting statements seem to give credibility to reports that there is a different approach on the issue by President Demetris Christofias and the Finance Ministry.

The Finance Ministry sources dismissed reports that an application may be made to the EU over the next few days but they pointed out that a request for financial help will most probably be made over the weekend, when international markets are closed, as was the case with Spain.

Cyprus has to raise 1.8 billion euros by the end of June to recapitalize Popular Bank after it reported heavy losses due to its holding a large amount of writedown Greek bonds.

All three major Cyprus Banks have to give an indication by June 15 how they intend to recapitalize.

Bank of Cyprus, the largest bank, and Hellenic Bank, which also suffered losses on account of their exposure to the Greek debt, are believed to be in a position to recapitalize by raising money from their stock holders.