• The new Bank will be a product of its time – It will target young people and new entrepreneurs.
• No cashiers, few branches, no customer queues – All transactions via ATMs
• N. Ioannou: “It will be a hybrid bank” – “More technologically advanced than existing banks”
• Written by: Lefkos Christou

The model of the new Cooperative Bank was outlined by Nearchos Ioannou, Economist, speaking at AKEL’s Economic Forum held yesterday at the Hilton Hotel in Nicosia, noting among other things that the new Cooperative Bank will be, as he said, “a product of its time”.

Mr. Ioannou, who is an Advisor to the Pancyprian Cooperative Company, referred extensively to the path the new bank is following until it officially receives approval from domestic and European supervisory authorities.

He expressed the view that the current conditions shaping the banking environment create the need for an additional banking pillar. “A human-centered pillar, a Bank that will not be driven by maximum profit,” he said.

“It will be a hybrid Bank,” he noted, which in terms of technology “will be far ahead,” in his view.

He argued that the entire effort regarding the Bank’s technological support aims for it to surpass even the technology used in the existing banking system.

“It is among our short-term goals to win over the youth and new entrepreneurs,” he added.

Wanting to further highlight the identity of the new Cooperative Bank, Mr. Ioannou said:

“We will be something like Revolut, maybe even more. But on the other hand, anyone who wants to will still be able to book an appointment, meet with a service officer, open an account, and apply for a loan.”

What the new Cooperative Bank will not have, he said, “is cashier transactions.”

“There will not be,” he noted, “branches in the classic sense, meaning no cashiers and no queues.”

This model, according to Mr. Ioannou, belongs to the past.

He stated that initially the new Cooperative Bank will start with only two branches in respective cities, later increasing to four.

He clarified that service for remote communities and mountainous areas will be taken into account, as they currently lack adequate support.

“We are not going to operate branches in every village. All cashier-related transactions will be conducted via ATMs,” he said.

The “long procedural journey, capital needs, and supervisors”

Nearhos Ioannou then referred to the procedural aspects of re-establishing the Cooperative Bank.

He described the process as “a massive project.” First, a prospectus will be issued, he noted, so that the new entity can raise capital.

The prospectus, he added, is nearing completion and will be submitted to the Cyprus Securities and Exchange Commission in the coming days, with the hope that in about two months it will be approved, allowing capital-raising to begin early next year.

He estimated that by next April, the relevant approval will be submitted to the Central Bank, and then the application will be sent to the ECB, which will provide the final approval.

He expressed the view that if the new Cooperative Bank meets all the criteria, it will receive the necessary approvals. He estimated that the new Bank could be operational within 2027.

Mr. Ioannou admitted that sourcing capital “is the biggest headache.”

The Advisor to the Pancyprian Cooperative Company avoided stating the exact amount of capital needed, but expressed confidence that securing it will not be difficult.

“A portion of this Bank could be given to private companies,” he noted, adding:

“The majority of shares will be allocated to an existing Cooperative Company.”

He added that there are plans to allocate part of the share capital to European Cooperative Banks, with which partnerships will be formed.

He then claimed that the domestic banking environment is oligopolistic and that the situation will worsen.

He argued that bank liquidity today stands at around 330%, far above the required liquidity demanded by supervisors.

“Despite this, lending rates are among the highest in Europe, while deposit rates are among the lowest.”

He also said that banks’ return on capital now exceeds 20%, “an outrageous figure for the Cypriot economy,” he argued.

According to Mr. Ioannou, the new Cooperative Bank is supported by a large movement, as he put it. By almost all unions and agricultural organisations, “so we hope this effort will succeed for the good of the country.”

In closing, he claimed that when this new Bank emerges and is still newborn, “many vultures will swoop in to tear it apart. A war of interest rates will begin and therefore we want to keep our cards somewhat close.”

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