Cyprus attorney-general has instructed the chief of police to launch a criminal investigation into issues highlighted by a probe into the collapse of the Co-op bank before and after the lender was bailed out by the state in 2013.
Attorney general Costas Clerides instructed police to focus their investigation on issues such as loan write-offs, suspicious loans, overcharging and the deal the bank made with NPL manager Altamira.
The decision to act came after a probe into the reasons behind the demise of the Co-op was conducted.
“A thorough study of the report on the collapse of the co-op compiled by the investigative committee has led to the conclusion that launching a criminal inquiry is justified,” read a statement issued by the legal services on Friday.
It said investigators must look into whether suspicious actions by individuals at 28 Co-op banks including those of Nicosia, Strovolos and Limassol.
“Objectionable behaviour concern previous years and allegedly led progressively to the need for recapitalising the Co-op in 2013 with the state paying €1.5bn,” the Legal Service said.
Police will probe the conditions under which €63 mln worth of non-performing loans (19 cases) were written off; why credit facilities had been granted in 16 cases, repayment delays, fulfilling the terms of the agreements, collection procedures; high interest rates; expense allowances including the use of corporate credit cards; advertising budgets.
The probe will also examine the contract signed with Spanish asset management company Altamira and the role played by certain individuals, as well as the acquisition of services worth €37 mln.
The struggling Co-op, Cyprus’ second largest lender which was bailed out by the state in 2013 and in 2015 with €1.7 bln injection, was split between a bad bank and a good bank.
The good assets were sold to Hellenic Bank, which paid the state €74 mln and received a balance sheet of €10.3 bln.
The public inquiry into the demise of the Cyprus Co-op Bank found that Finance Minister Harris Georgiades bears the most responsibility for not taking corrective measures.
Opposition parties had demanded that Georgiades resign over the collapse of the island’s second largest bank following the probe’s findings.
The inquiry also faulted senior executives for bad judgment, inaction and ineptitude in dealing with a mountain of bad loans.