Investigation ordered into the downfall of the Cyprus Co-operative Bank

The crisis has brought street protests and calls for ministerial resignations

Cyprus’s attorney general has appointed a three-member panel to investigate the crisis at the country’s Co-operative Bank.

The team, headed by Giorgos Arestis – a former Supreme Court and EU court judge – has been asked determine the actions, decisions or omissions behind the collapse

Mr Arestis is joined on the panel by economist Giorgos Charalambous, a former Bank of Cyprus executive, former board member of the development bank and former head of the securities and exchange commission, and Giorgos Georgiou, a former executive at Alpha Bank and former chair of the bank association.

They will look at issues such as staff appointments, administration and corporate governance, including the structure and power and authority of the members of key management bodies.

Also under scrutiny will be loan procedures and the management of bad debts. There has been much comment in Cyprus’ national press about the ease with which loans were granted, including allegations of easy loans to friends and relatives and friends of people who worked there.

The bank, which has been sold to Hellenic Bank as part of the Cypriot government’s plans to eliminate bad debt in the national banking system, had to be bailed out in 2013.

There has been widespread anger in Cyprus over the crisis at the bank, which has prompted the government to tighten up the laws on foreclosures and insolvencies. There has also been calls from opposition parties for the resignation of finance minister Harris Georgiades.

Critics blame him for the the bank’s problems and accuse him of selling it on unfavourable conditions for the state, including the issue of a €2.5bn bond in favour of the purchaser and guarantees against unforeseen future losses.

But Cypriot president Nicos Anastasiades said: “The Cyprus Cooperative Bank’s problems were neither created nor were result of political decisions by the finance minister.”

Fears that the bank might be liquidated have sparked long ATM queues as people withdraw their money, and it has been reported that more than €70m has been taken out.

Attempting to quell concerns, a spokesman for Cyprus’s central bank said the liquidation of the Cooperative Bank was only a “remote, theoretical probability” which had only been highlighted “to stress the most extreme negative consequences if the transfer of the Cyprus Cooperative Bank to Hellenic Bank is not completed”.

Meanwhile a protest group, the Movement Against Foreclosures, has held street rallies protesting against tougher measures on bad mortgage debt.

The Citizen’s Alliance party, which backed the protest, said the government had “irresponsibly and catastrophically, brought things, yet again, to a tragic impasse”.

And the social democratic Edek party said: “Unfortunately, the Central Bank of Cyprus, instead of protecting the Co-operative Bank and most of all the depositors through its actions, has through rash actions and statements created an additional problem, if one takes into account the withdrawal of approximately over €70m from the Cooperative Bank.”

In this article


Join the Conversation