Cyprus’ Cooperative Authority Addresses Challenges and Progress in New Nationwide Cooperative Bank Proposal

The head of Cyprus’ Authority of Cooperative Societies, Kypros Protopapas, has expressed concerns about the substantial challenges involved in establishing a new nationwide cooperative bank. Speaking to the House finance committee this week, Protopapas explained that the authority has been advising interested parties on the stringent requirements for creating such a cooperative institution.

Initial consultations regarding the bank began five years ago and have since involved at least ten further meetings, reflecting the level of complexity involved. As the primary regulatory body for Cyprus’ cooperatives, the authority has cautioned that this new initiative will demand extensive preparation and insight into the regulatory demands.

Protopapas underscored that the establishment of a new cooperative bank would face hurdles well beyond those encountered by traditional cooperatives, and he stressed the need for a deep understanding of these challenges. Although supportive of exploring the feasibility of the project, he noted that it would differ significantly from earlier cooperative models. He reminded the committee that the original cooperatives did not require initial capital and operated on a structure of unlimited liability for members.

Additionally, Protopapas directed interested parties to carry out a comprehensive analysis, noting that licensing, regulation, and supervision for the proposed cooperative bank would fall under the Central Bank of Cyprus (CBC) and the European Central Bank (ECB). Following this guidance, stakeholders have engaged a consultancy to conduct a study and have consulted with both the central bank and the Cyprus Securities and Exchange Commission (CySEC) to understand the regulatory landscape better.

The finance committee decided to convene a special parliamentary session to receive further updates on the proposal.

Turning to the state of Cyprus’ cooperatives, Protopapas reported that 55 cooperatives remain active across several sectors, including consumer and supply, agricultural sales, processing, and services. The authority oversees these entities to ensure compliance with Cyprus’ cooperative laws and regulations. Since the 2013 financial crisis, which severely impacted the cooperative sector, many of these organizations have regained stability through reforms and dedicated efforts. Protopapas highlighted several successful examples, such as cooperatives in Sotira, Paralimni, and Argaka, which are financially healthy and continue to support local farmers and communities.

One standout success, according to Protopapas, is a new cooperative in Astromeritis. Now employing over 100 people, this cooperative achieved profitability after overcoming years of financial struggles, boasting a turnover that exceeds €50 million, largely from exports. Another example he mentioned is Sopaz, an animal feed cooperative with an annual turnover surpassing €100 million and demonstrating strong profitability. However, he also acknowledged that a few smaller cooperatives still face difficulties, with ongoing efforts to improve their financial situations.

On the topic of social enterprises, Protopapas shared that the cooperative authority’s legislative framework, introduced a decade ago, is now fully in place. The authority has started accepting applications for social enterprise registration, with four applications currently under review, and it is guiding these entities through the transition process.

Furthering its commitment to social responsibility, the cooperative authority is promoting corporate social responsibility (CSR) within Cyprus. Protopapas referenced the completion of the Corporate Sustainability Supporting Framework project, funded by the European Economic Area and Norway Grants, which encourages Cypriot businesses to adopt sustainable practices. The authority has also established a state CSR register, adopting national standards for CSR and certification from an accredited body. Four businesses, including three care homes, are already registered, with additional applications expected soon.

In terms of budget, the Authority of Cooperative Societies’ budget for 2025 stands at €2,796,811, with nearly half allocated to the payroll for employees seconded to other public departments and services.

In response to a question from Akel MP Andreas Kafkalias, Protopapas confirmed that a support plan for social enterprises has been completed, reviewed by the commissioner for state aid, and is now slated for presentation to relevant ministries for Cabinet approval.

By fLEXI tEAM