Cyprus Mail

Co-op customer ran up €3.2m debt in account blunder

The co-op inquiry continued on Monday

A customer at the Ahna cooperative bank was allowed to run up a subsequently unserviced debt of €3.2m even though his current account had a €1 limit, an inquiry into the sector’s collapse heard on Monday.

In a second similar case the debt was over €400,000.

The former head of the co-op Efstathios Efstathiou said the first current account was opened in February, 2017 and had a limit of €1. The company that opened it ended up owing the bank over €3.2m including interest, he said. In a separate case, two people opened an account in August, 2006 and despite having no overdraft, they ended owing some €413,000.

Efstathiou told the inquiry that bankers had made the mistake of letting the account operate on current balance instead of available balance.

He explained that the customer deposited cheques from other banks into the account but before they cleared, the co-op honoured cheques the customer issued from his co-op account.

But one day, the customer’s main partner, was put on the bad cheque registry and all the cheques held by the co-op bounced.

A probe had been carried out and it was determined that it had been wrong to allow the account to work on its current balance. The customer’s debt immediately jumped to €1.7m and eventually ended up being €3.2m with the interest.

Efstathiou said the client in question moved cheques worth €300,00, but he was left hanging by his partner to the tune of €2.2m. In turn, the client left the bank hanging. The incident took place in the space of a week.

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