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Cyprus

Loss from reimbursing overcharged customers ‘will not affect co-op’

The loss from the reimbursement of overcharged clients will not affect the co-op sector, a senior official said on Thursday, denying that the amount was €35m, as reported in the media.

The head of the central co-operative bank, Nicolas Hadjiyiannis, said the sector had €3.3bn in provisions and €1.3bn in capital and such amounts made no difference.

According to financial ombudsman Pavlos Ioannou, while investigating a complaint filed by a borrower, his agency found that the co-op had agreed to charge interest on a housing loan based on the European Central Bank’s base rate, plus a surcharge.

However, the Strovolos co-op charged its client a higher rate according to a different base rate.

Ioannou said that the incident proved systemic, meaning it applied to over 1,000 loan agreements by the lender.

The borrower who filed the original complaint will be reimbursed €27,000 in excess charges.

Hadjiyiannis said they were examining five per cent of their loans, between €500m and €600m.

“From which the overwhelming majority has no issues. That is why I am reducing (the amount) substantially, and I say it possibly concerns only one co-op bank,” he said.

He said the amount reported, €35m, was not correct, but couldn’t give a more accurate figure at this point. “The entire review of the matter is a time-consuming procedure,” he said.

He said that it was a matter that emerged after the country joined the common currency in 2008.



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