.
The government must close its ears to opposition noises and push the Co-operative Central Bank to speed up its reforms and privatisation process, if it is to get rid of its 99% stake and allow the grassroots lender to regain its reputation in the rural and farming sector.
But farmers and disgruntled former “members” have not yet realised that the structure and mission of the Cyprus Co-op have changed, no longer the laid-back bank that lent out money without ample collateral or guarantees. This is why they took to the streets with their tractors to protest the government’s plans to seek foreign investors, as was the case during the Capital Link summit in New York last month.
But it was clear from the supportive rhetoric that all the objections came from the opposition parties, which form part of the political establishment that tolerated rampant mismanagement and corruption in the banking sector all these years, the results of which we know already.
Now that a fresh round of elections is upon us, the political parties (ruling and opposition) have realised that they need to pamper to the agrarian voters, and where best to begin than from depositors and former “shareholders” of the Co-op banks.
But the transformation of the Co-ops was long overdue, which is why the system can never return to the haphazard days of more than 100 Co-operative savings banks, lack of transparency and control. The government was right to seek foreign funds (in the absence of local investors), while an IPO will also help settle the issue of the small shareholders, who will be allowed to take a more active role in the future CCB.
The state needs to recoup its 1.5 billion euros it has pumped into the Co-operative, in order to re-invest that money in development projects, something this “pro business” administration has sacrificed in order to satisfy the whims of civil servants who keep on demanding higher pay, regardless of state finances.
One way to get rid of party cronyism (in which the ruling DISY seems to have become a master), is to offload as much of the public services as possible, including the telecom and power companies, while the part-privatisation and part-flotation of the Co-op bank should be a litmus test for future selloffs.
