By Angelos Anastasiou
The Co-operative Central Bank (CCB) yesterday announced decreasing interest rates payable on its student loans, to 4.5 per cent, and the introduction of a scholarship programme for undergraduate and postgraduate students in Cyprus.
In a statement, the CCB said the rate reduction will come into effect as of January 1, 2015, and will apply to both new and existing student loans – the latter on condition that repayments are up to date.
In the case of restructured non-performing loans, the statement added, interest rates will initially be reduced to 5.5 per cent, and if the restructured loan repayment schedule is met for six months the 4.5 per cent rate will apply.
With regard to the scholarship, the CCB said it has allocated €400,000 to cover 40 four-year undergraduate programme studies, as well as ten postgraduate programmes.
Applications will be evaluated by a CCB managerial subcommittee on the basis of academic and financial criteria, provided that either the applicant or a parent is a member of the Cooperative Credit sector.
The scheme excludes professional Co-operative Credit Institutions, which have their own scholarship programmes.
In remarks on the above decisions, CCB chairman Nicolas Hadjiyiannis said they were the result of the CCB’s performance during the European Central Bank’s stress testing last month, in which the lender scored better than any of the four Cypriot banks reviewed.
“As we had promised, following the perfectly successful outcome of the ECB’s stress tests and the confidence it has given us, we focus on the implementation of our operational targets,” said Hadjiyiannis.
“We contact our customers, modernise our traditional people-centred model, and offer solutions and options on a new, healthy and modern footing.”
“Supporting young people and education are basic pillars of our new strategy.”
The CCB had found itself on the brink of collapse after the banking meltdown precipitated by the March 2013 Eurogroup decisions.
Urgent recapitalisation needs and mounting non-performing loans posed a grave threat to the network of lenders, until a €10bn bailout loan secured by the government from international lenders included €1.5bn for its recapitalisation, with an additional €1bn ‘cushion’ for future needs.
But the capital injection came with a restructuring plan that reorganised the island-wide network from 93 to 18 lenders, cut excess staff through redundancy schemes, installed new management and drastically consolidated operating cost.
The result has been a huge success thus far, with the CCB best-placed among competing lenders in the Cyprus market to seek a growth strategy and was deemed sufficiently capitalised without the €1bn ‘cushion’ from the country’s emergency loan.