Popular Bank of Cyprus, the second largest bank of the country, expects a further deficit in its 2012 results on account of its extensive exposure to the Greek debt and the ailing economy, a bank statement said on Wednesday.

The deficit will be lower than the 3.5-billion-euro (about 4.7-billion-U.S. dollar) loss reported on its 2011 results, according to the statement issued in accordance with Stock Exchange Regulations.

Popular Bank was nationalized after receiving 1.8 billion euros of state money six months ago to avoid a collapse following the write-down in the value of Greek government bonds it held.

The bank predicted increased provisions for loan write-down and lower operation expenses as a result of the continued worsening of economic conditions both in Cyprus and Greece.

Popular Bank said that it would not comment on reports that Japanese Nomura Bank had made an offer to buy the Greek operations of all Cyprus banks, which account for 12 percent of total bank operations in Greece.

Cyprus was forced to seek bailout by the eurozone and the IMF, which may top 17.5 billion euros -- almost equal to the island's GDP -- after its two main banks applied for recapitalization support from the state in accordance with European Central Bank directions.

A recapitalization amount of 10 billion euros has been included in a provisional bail out deal but a final estimate will be made only after the results of a due diligence of the banks are announced on Jan. 15. (1 euro = 1.33 U.S. dollars)