* €1.5 bln to be used for funds from ECB *
The island’s Cooperative credit societies will soon operate as a unified banking group, following a bailout programme and a set reforms that are restructuring the community based savings banks into a commercial entity.
The President of the Cooperative Central Bank (CCB) Council Nicolas Hadjiyiannis presented the road map with the key actions in the next three months as requested by the Troika of international lenders, which covers the appointment of a new Executive Director, bolstering independence and qualifications of the Coop boards, retaining customers, containing asset deterioration and to prepare the transfer of non-performing loans to specialised units within the cooperative sector.
“Essentially the cooperative credit sector will operate as a single banking group,” he said adding that following the conclusion of its restructuring, the CCB will operate as a holding company with 18 associated Coop banks he said.
Hadjiyiannis said that the Coops will focus on recovering NPLs, which stand at 40% of their loan portfolio totalling 13 bln euros and will set up a central unit to manage loans in arrears.
"Loans that were given should be repaid; they have not just been given away," he said.
He noted that the Coops do not have exposure to large corporate loans as is the case with the commercial banks, but it has granted loans in the retail sector and loans to small and medium sized companies.
Hadjiyiannis called on borrowers who are in a position to repay their loans to start paying up, adding that the Coops will try to reach a settlement with trouble borrowers. He noted that the Coops will consider to write off non viable loans.
With regard to property repossessions, he said the Coops will show sensitivity on property seizures.
"Repossessions is the last step in a non-performing loan. Our goal is not to proceed with individual repossessions but at the same time we own it to the country to take all the necessary steps to secure the interests of the cooperative sector," he said, adding that "we will do what the correct baking practice entails with sensitivity."
Hadjiyiannis said that the Coops will proceed with a salary cut of 15% as prescribed by the restructuring plan and a targeted voluntary retirement scheme.
The 1.5 bln euro capital injection has already been disbursed by the Troika in the form of a bond and has been currently deposited with the Central Bank of Cyprus. It will be granted to the Coops following the approval of the sector’s restructuring plan at the end of January. Hadjiyiannis said the Coops will use the bond to acquire additional liquidity from the European Central Bank.
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