The Cyprus Cooperative Bank – which is 77% state-owned following a financial crisis and bailout in 2013 – has put itself up for sale.
The bank has appointed Citigroup Global Markets to look for investors to buy up the lender, either in whole or in part. The deadline for expressions of interest is today, 29 March.
The bank is the leader in the amount of deposits held by Cypriots, but is also weighed down by bad loans – more than 58% of the total.
This follows a banking crisis that hit Cyprus in 2013, forcing the country to accept a rescue deal that included a seizure of unsecured deposits in its two largest lenders.
Finance Minister Harris Georgiades said the move would help rebuild confidence and credibility in the bank.
But the plans have been met with anger from opposition parties who accuse the government of “selling off the public wealth”, Cyprus Mail Online reports.
The paper says the bank was recapitalised with almost €1.7bn in taxpayers’ money in 2014 and 2015, but it is struggling with some €6bn of non-performing loans, accounting for more than half of its portfolio. In 2017, co-ops extended the collateral recovery period to seven years, a move that cost €150m in provisions.
Main opposition Akel spokesman, Stefanos Stefanou, said the government’s tactic had been to hide its real intentions “behind various promises”.
Quoted in Cyprus Mail, he said: “Initially, the Anastasiades administration promised to return the bank to its owners. Later, they committed to returning the co-operatives to the people. They prepared a plan to list on the stock exchange but he did not even keep that promise.
“The government, as the main shareholder of the Cyprus Co-operative Bank, has sole responsibility towards society for the decisions and actions that have taken place and which lead to the sale and the loading of the damage onto the shoulders of taxpayers.”
Independent MP Anna Theologo is leading a public protest and will present a memo to the attorney-general asking him to look into possible “irregularities and squandering of public funds as regards the management of the organisation”.
“I want to believe that we care about who manages public funds and how they embezzle people’s money with their decisions,” Theologou said.
“I believe that no one will tolerate to pay again, for the third time, for the mistakes of the banks and I truly hope that this time those responsible assume their responsibilities and resign.”
Other opposition MPs fear the ‘good part’ of the bank will be sold while the state keeps the balance sheet with the delinquent loans,
But in an opinion piece, Cyprus Mail hit out at the management of the bank before the financial crisis hit, accusing it of reckless lending in a “free-for all”, adding that the bank’s wealth was “plundered … by its executives, members, customers and political parties, all of whom benefited from what they described as the people-centred co-op movement and banking with a human face”.
Defending the decision to sell the bank, it added: “The CCB cannot be described as public wealth when more than 50% of its assets are toxic, threatening its survival.
“At least the government’s decision will salvage something from the shipwreck.”
The bank dates back to 1938, when Cyrus’s co-operative credit societies had expanded to such an extent that a central body was needed to facilitate their work, and it became clear that the Agricultural Bank, which was established in 1925, could not meet the short-term borrowing needs of co-ops and farmers.