Co-ops won’t need any more funds… for now, says gov’t

Financial Mirror (Cyprus) - - FRONT PAGE -

Co-op­er­a­tive Cen­tral Bank, bailed out by the gov­ern­ment with a EUR 1.67 bln in­jec­tion, will not have any cap­i­tal needs at present and will list on the stock ex­change soon, Dion­y­sis Diony­s­iou, Head of the Man­age­ment Unit for the co-op­er­a­tive sec­tor at the Min­istry of Fi­nance has said.

Brief­ing the House Fi­nance com­mit­tee, Diony­s­iou said that in case any cap­i­tal needs arise, the CCB will have to pro­ceed with a cap­i­tal raise by June 30 2017, oth­er­wise it will have to Septem­ber 2018.

He noted, how­ever, that mar­ket dis­rup­tions due to the Brexit vote or other in­ter­na­tional de­vel­op­ments, such as the down­turn in the Ital­ian banks and Deutsche Bank, may cause the need for fresh cap­i­tal.

The Co-op­er­a­tive sec­tor has been bailed out by the gov­ern­ment which in­jected EUR 1.67 bln on two sep­a­rate oc­ca­sions, EUR 1.5 bln in 2014 and EUR 170 mln in 2015. Un­der the EU state-aid rules, gov­ern­ment money can be granted only when a re­struc­tur­ing plan is in place.

Diony­s­iou said that the most im­por­tant tar­get in the re­struc­tur­ing plan is the grad­ual re­duc­tion of the state’s hold­ings in the CCB share cap­i­tal. Cur­rently, the state owns 99% of the CCB share cap­i­tal.

“In any case, in the con­text of the agree­ments signed,


cap­i­tal by the CCB is obliged to com­plete the process and to be ready to join the Cyprus Stock Ex­change (CSE) by the end of the year,” Diony­s­iou added.

The Fi­nance Min­istry of­fi­cial said the CCB has al­ready launched the pro­ce­dure to ac­quire the nec­es­sary li­cences to join the CSE, not­ing that the CCB has sub­mit­ted its first draft prospec­tus to the Se­cu­ri­ties and Ex­change Com­mis­sion (CySEC).

He added that based on the re­struc­tur­ing plan’s tar­gets, in case it has no cap­i­tal needs, the CCB should in­crease its share cap­i­tal by at least 25%, not­ing that only a quar­ter of this cap­i­tal is­sue will be made in the form of an ini­tial pub­lic of­fer­ing.

After 2019 the CCB should con­tinue the cap­i­tal rais­ing pro­ce­dure ev­ery nine months so that the state par­tic­i­pa­tion would be re­duced to 25%.

Fur­ther­more, Diony­s­iou said the CCB has com­pleted loan re­struc­tur­ings amount­ing to EUR 2 bil­lion.

The CCB is di­rectly linked with the Cypriot econ­omy as 99% of the de­posits come from Cypriot res­i­dents, while it has granted no for­eign loans.

“There­fore the im­prove­ment of the lo­cal econ­omy leads to the im­prove­ment in the CCB’s in­dices,” he con­cluded.

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