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The Pancyprian Cooperative Promotion Company is actively seeking a contractor to draft a prospectus and issue shares as part of its plan to establish a "new small cooperative bank" in Cyprus, according to an announcement made on Wednesday.
This move seeks to fill the void left by the collapse of the Cyprus Cooperative Bank in 2018, as noted by the company’s president, Panikos Hambas.
Hambas elaborated on the measures taken to revive the cooperative movement in Cyprus, explaining that the Pancyprian Cooperative Promotion Company was officially registered in December 2021 with the registrar of cooperatives. The company's primary mission is to explore the current financial landscape in Cyprus and evaluate whether the establishment of a new nationwide cooperative bank is viable.
"The aim is to explore whether the conditions are ripe for establishing a new cooperative bank that could act as a counterweight to the current situation in Cyprus, where nearly two banks control 80 per cent of the banking system," Hambas stated.
The company made significant progress in March 2022, when it held its first general assembly and elected a 19-member board, with Hambas assuming the role of president.
Following this, they sought expert advice on how to create a new cooperative bank, and four companies submitted bids to carry out a feasibility study. PwC was awarded the contract, which included conducting stress tests on the bank's viability. The results indicated that the bank could operate sustainably under a five-year plan.
Public information sessions have already begun, with the first taking place in Lympia, attended by parliamentary representatives. Hambas emphasized the importance of political backing, noting that amendments to the cooperative law would be necessary for the bank to proceed.
In addition, company representatives have met with both the Central Bank of Cyprus (CBC) and the Cyprus Securities and Exchange Commission (CySEC) to discuss regulatory requirements. Hambas pointed out that if the new bank gathers over 150 shareholders through a public offer, it would need to issue a prospectus, something they are currently investigating.
"We are now investigating the procedures for preparing the prospectus, following the state’s legal frameworks for a new small cooperative bank," Hambas explained.
Importantly, the new bank is not aiming to replicate the scale of the previous cooperative bank, which became the second-largest bank in Cyprus before its collapse in 2013. "We are building this project step by step to avoid repeating the same mistakes," Hambas stressed.
He further explained that the new bank would not seek to become a systemic institution.
Instead, it would focus on serving individuals, with an emphasis on maintaining low operating costs by leveraging technology and hiring qualified personnel. The bank’s lending strategy would prioritize areas like student, educational, medical, and housing loans, as well as loans for green development, renovations, and the primary sector.
Hambas also highlighted the potential for financing the agricultural sector, noting that there has been €1.2 billion in investments between 2004 and 2024. According to Cypriot banking law, the bank must raise at least €5 million in initial capital to be licensed as a credit institution. "There is no other way but to issue shares," Hambas remarked.
He also revealed that market research had been conducted, which yielded valuable data on customer satisfaction with existing banks and the potential for attracting deposits. The company is considering hiring a second contractor if necessary to ensure smooth progress.
Finally, Hambas announced that regional consultations would continue, with future meetings scheduled in areas such as Arediou, the municipalities of Latsia-Yeri, and Limassol, as they push forward with plans to launch the new cooperative bank.
By fLEXI tEAM
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