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Cyprus

CCB boss says strictest supervision will eliminate fraud at co-ops

The chief executive officer of the Cooperative Central Bank Nicolas Hadjiyiannis has vowed that fraud cases similar to those currently investigated by police will not happen again, as the financial institution is being subjected to the strictest possible supervision.

Hadjiyiannis, who was commenting in an emailed statement on Wednesday said that the current management of the Cooperative Central Bank, which the government bailed out with €1.5bn in 2014 and is expected to inject further €175m this year, “will not allow similar phenomena to occur again”.

“Let us note that the cooperative banks are the most supervised financial institution in Cyprus as it is subjected to multilevel supervision by the European Central Bank, the Central Bank of Cyprus and the European Commission,” which monitors the implementation of a restructuring plan, the Coop-CEO said. This, he added, ensured that best banking practice are implemented.

Hadjiyiannis’s comments came hours after Finance Minister Harris Georgiades said in an interview with state-radio CyBC that the cooperative banks are for the very first time in their history staffed with qualified managers. “There were no suitability criteria, no control mechanisms, no strict supervision, which is necessary for the people to have confidence,” the finance minister said. “Alone this fact is so important that can offer us reassurances as depositors”.

Following months of investigations by the police, authorities have initiated the first criminal procedure with eleven individuals, including former coop-managers, facing charges related to a €12m loan scam at the Agia Phyla cooperative bank in 2007 to 2009.

Georgiades added that the cooperative banks were already producing first “tangible and positive results”.

The CEO of the Cooperative Central Bank added that the lender last year restructured more than €1m in non-performing loans with 78 per cent considered to be healthy restructurings.

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