Finance Minister Makis Keravnos on Wednesday expressed his full support for the re-establishment of the cooperative banking sector in Cyprus on a stable and sustainable basis.
During a meeting with the board of the Pancyprian Cooperative Association, Keravnos welcomed the initiative, stating that Cyprus’ society and economy need a new, healthy cooperative banking system.
“The message we are receiving is one of optimism and support for our efforts,” the association said in a statement following the meeting.
The association, which is spearheading the creation of the Pancyprian Cooperative Bank, informed the minister of the progress made so far.
Relatedly, Panikos Hampas, president of the association, told Stockwatch that during a previous meeting at the Presidential Palace, the atmosphere had been highly positive.
“There was a favourable attitude towards addressing the issue,” he said.
Hampas highlighted that today’s meeting with the finance minister was significant, as the minister has already expressed his support for the initiative. The association sought this meeting to update Keravnos on the status of the process.
“We are proceeding as planned, following all necessary institutional procedures. We have met with all relevant stakeholders, issued tenders, and commissioned a study by PwC, which confirmed the project’s viability,” he explained. “Additionally, we conducted 25 regional gatherings across Cyprus to hear public opinions because our goal is to build this initiative from the ground up.”
Moreover, he reported that the public response during these meetings was overwhelmingly positive, with many expressing their intention to purchase shares in the bank.
Hampas also noted that nearly all political parties had reacted positively to the project, following meetings with the association.
While the initiative does not seek financial support from the government, Hampas underlined that moral backing from both the government and the finance ministry is crucial.
“The message I am getting is that the Presidency of the Republic wants to see the cooperative banking sector revived,” he said.
He further stressed that this effort is a matter of unity and development that will particularly benefit the younger generation.
“Given the current state of the banking sector, this has become a patriotic duty. Two banks in Cyprus control 86 per cent of the market, and Cypriots no longer invest in banks. It is essential to have a bank with Cypriot interests,” he added.
He also mentioned that the cooperative bank’s establishment process is moving forward, with a key upcoming milestone being the selection of a company to draft the bank’s prospectus.
In addition, Hampas confirmed that the tender deadline for this process closes on Friday.
“The share capital is a fundamental requirement for setting up a bank, alongside the formation of the board of directors and other regulatory necessities,” he said.
Initial capital requirements are estimated at €5 million, with additional funding determined through further study and incorporated into the prospectus.
Once the necessary funds are secured and the procedural steps completed, the association will submit an application to the Central Bank of Cyprus for the licensing of the Pancyprian Cooperative Bank.
Hampas noted that the association has already held informative meetings with both the former central bank governor, Constantinos Herodotou, and the current governor, Christodoulos Patsalides.
The project, he said, is being developed under the guidance of PwC, ensuring compliance with regulatory standards.
Regarding potential legislative approvals required for the bank’s formation, Hampas stated that, at present, no specific parliamentary approvals are needed.
He explained that within the Pancyprian Cooperative Association, each member will have one vote.
Based on guidelines from the CBC, the association can manage the preliminary steps since the new cooperative bank does not yet have a legal status.
“The prospectus will clarify that our association will create the Pancyprian Cooperative Bank, where at least 70 to 75 per cent of the share capital will belong to our entity,” he said.
“This ensures that control remains with the people, allowing individuals and existing cooperative entities to invest,” he added.
Currently, there are approximately 25 active cooperative companies, mainly in the agricultural sector, which will have the opportunity to buy shares.
The remaining 25 to 30 per cent of shares will be allocated to the private sector, specifically to companies registered with the Registrar of Companies.
This structure aligns with European cooperative banking models while preventing any single entity from acquiring an excessive stake.
The final distribution of shares within the private sector will depend on public participation, with Hampas noting that higher capital investment will lead to stronger results.
“We will initially operate as a non-systemic bank, but nothing prevents us from becoming systemic in the future,” he concluded.
