The Cypriot company for the promotion of the cooperative movement is at the process of seeking an investment firm that would underwrite an initial public offering for the creation of a “small cooperative bank” in Cyprus that would replace the Cooperative Cyprus Bank which went into liquidation back in 2018, Panikos Hambas told CNA.

Speaking to CNA, Hambas referred to the steps taken so far as part of the efforts to set up a new Cooperative Bank in Cyprus.

He said that a company titled Pancyprian Company for the Promotion of the Cooperative Bank has been registered in the Commissioner for Cooperative Societies, with the aim to explore both the objective and financial conditions as well as the subjective aspect for such an undertaking.

Hambas said the Company held its annual general meeting in March 2022 selecting its 19-member board of directors, while he was elected as president.

Following consultation with experts, the company drafted and launched a tender for advisory services between major audit firms, with the contract awarded to PwC which carried out a feasibility study.

The study, Hambas said, showed that such a bank with a five-year plan would be viable, while a stress-test was carried out at the standards of the stress-test carried out in commercial banks.

He also said that the Company has held “constructive” meetings both with the previous and the current Central Bank Governors as well as the Cyprus Securities and Exchange Commission, who told that public offerings to over 150 members should be accompanied by a prospectus.

At this stage we are looking into the procedures and the cost for the preparation of the prospectus, he added.

Asked how the company will gather the €5 million of own capital required from a credit institution in order to be licensed for banking operations, Hambas said they will proceed with an initial public offering, noting that a survey was carried out two years ago showed interest and room for attracting deposits.

As he noted, the company is now inquiring options with regard to a licensed investment company which will act as an underwriter for the public offering, while the selection of two investment companies should not be excluded.

Hambas made clear that the aim is to create a “small cooperative bank” that would not reach the size of now-defunct CCB which after 2013 and until its failure was the second largest banking institution in Cyprus.

“We will build it step by step and carefully to avoid the mistakes of the past,” he said, adding that they will leverage on technology in order to maintain the operational costs down.

Asked on the envisaged loan provision policy, Hambas said the new cooperative bank will focus on providing student loans, health loans, housing, loans for green growth and renovations as well as financing the primary sector.

He also noted that the company is carrying out gatherings mainly in rural areas to brief people on the undertaking.