By Elias Hazou
THE finance minister on Thursday issued a decree for the recapitalisation of the Co-operative Central Bank (CCB), which provides for its gradual privatisation with the goal of listing the CCB on the Cyprus stock exchange in 2017.
The decree is the executive act that follows parliament’s approval earlier this week of a €175m capital injection into the CCB.
The government will gradually recover the cash through a special quarterly tax on deposits at Cypriot banks. Proceeds from the tax will go into the bank recapitalisation fund.
Following their bailout after the 2013 financial meltdown, the co-ops are 99 per cent owned by the state.
Under the decree, by December 31, 2016 the CCB must take all the necessary actions and secure the required approvals so that it can list its shares on the stock exchange in June 2017.
By September 30, 2018, 25 per cent of the CCB’s paid-up capital must be listed on the stock market via a capital increase.
Other than the state and the recapitalisation fund, existing shareholders – and according to their stake prior to the issue of new shares – will have preferential rights for acquiring stock in the event the shares are made available via a public offering.
Up to 25 per cent of the total shares issue will be made available to the general public. The remainder will be made available to a select number of persons via private placement.
A new share issue will take place, under the same procedure, for another 25 per cent of the CCB’s paid-up capital, by June 30, 2019, and a further 25 per cent by June 30, 2020.
The target is for the state to reduce its stake in the CCB to 25 per cent by mid-2020.
In the event the state divests more than 75 per cent of its stake before the aforementioned dates, then listing on the stock exchange will not take place.
The state may divest its shares, via private placement, to investors, including financial institutions, cooperative or commercial banks, insurance companies, investment or pension funds. Investors who are directly or indirectly financed by the CCB are ineligible to buy shares.
The price at which the shares are to be sold must be equal to or greater than the valuation price, according to the decree.