Co-op to pay € 2 million to customers after another interest rate error

The state-sold Cyprus Cooperative Bank (CCB) will pay up to EUR 2 mln, in addition to the EUR 125 mln it has paid back, for excessively charging customers in interest rate payments on loans.

The money will go to rectify customer accounts that were overcharged due to a mistake in interest rate calculations concerning customer loans for the period of 2008-2013, Financial Ombudsman Pavlos Ioannou told CNA.

Ioannou said the new error concerns 150 Co-op accounts from the 11,300 or so initially identified to be burdened with excessive charges concerning the basic lending rate, which resulted in the return of approximately EUR 125 million to borrowers.

He added that according to CCB’s preliminary estimates, the additional amount in recompense for the new error may reach EUR 2 million and is associated with loans that have not yet been repaid.

Ioannou said the mistake was identified by following complaints by “many angry customers”.

In one case, after addressing the initial mistake, the CCB

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office reduced a customer loan by EUR 14,000 but later charged the account with the same amount, adding that the Co-op made these alterations without notifying its customers.

“Such practises, which bring about a sudden change in bank accounts, create a shock to the confidence in the banking system,” Ioannou said.

In May 2017, the CCB announced it would return millions to 11,323 borrowers due to the wrongful application of the rate on loans linked with the European Central Bank basic rates or the Euribor.