The Pancyprian Cooperative Promotion Company is seeking a contractor to prepare a prospectus and issue shares as part of its roadmap to establish a “new small cooperative bank”, it emerged on Wednesday.
This initiative aims to fill the gap left by the collapse of the Cyprus Cooperative Bank in 2018, according to the company’s president, Panikos Hambas.
In this context, Hambas outlined the steps taken towards re-establishing the cooperative movement in Cyprus.
He explained that in December 2021, the Pancyprian Cooperative Promotion Company was registered with the registrar of cooperatives with the objective of investigating the financial conditions in Cyprus and assessing whether a new nationwide cooperative bank could be feasible.
“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 said.
He added that in March 2022, the company held its first general assembly, electing a 19-member board, with Hambas as president.
After consulting experts on establishing a new cooperative bank, four companies submitted bids to conduct a feasibility study.
PwC was awarded the contract, which included stress testing the bank’s viability.
The study concluded that such a bank could operate sustainably under a five-year plan.
The company has begun public information sessions, with the first held in Lympia, including parliamentary representatives.
Hambas highlighted the need for political support, as amendments to the cooperative law would be required.
Furthermore, representatives from the company have also met with the Central Bank of Cyprus (CBC) and the Cyprus Securities and Exchange Commission (CySEC).
Hambas said that a public offer with more than 150 shareholders would necessitate the issuance of a prospectus, which the company is currently exploring.
“We are now investigating the procedures for preparing the prospectus, following the state’s legal frameworks for a new small cooperative bank,” Hambas said.
He added that the new bank would not aim to match the scale of the previous cooperative bank, which became the second-largest bank in Cyprus before its downfall in 2013.
“We are building this project step by step to avoid repeating the same mistakes,” he stated.
Hambas explained that the new bank would not seek to become a systemic institution, but would focus on serving individuals, with an emphasis on maintaining low operating costs through technology and hiring qualified personnel.
The bank’s lending policy, he continued, “would prioritise student, educational, medical, and housing loans, as well as loans for green development, renovations, and the primary sector”.
Hambas also said that there was potential for financing the agricultural sector, which saw €1.2 billion in investments between 2004 and 2024.
Under Cypriot banking law, the bank will need to 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 said.
“We conducted market research, which provided plenty of data related to the satisfaction levels with existing banks and the potential for attracting deposits,” he added.
He further said that they are considering the appointment of a second contractor if necessary.
Finally, Hambas also announced that regional consultations would continue, with upcoming meetings planned in Arediou, the municipalities of Latsia-Yeri, and Limassol.
