The Cyprus Promotion of Cooperation Society is currently seeking a contractor to draft a prospectus and issue shares, as part of its efforts to create a "new small cooperative bank" that aims to address the gap left after the collapse of the Cooperative Bank of Cyprus in 2018, according to Panicos Hambas, the society’s president.

In an interview with the Cyprus News Agency, Mr. Hambas detailed the steps taken towards the re-establishment of cooperation in Cyprus.

On December 10, 2021, the Cyprus Promotion of Cooperation Society was registered with the Registrar of Cooperatives. According to Hambas, the goal was to assess both the objective and financial conditions in Cyprus and to evaluate the public's sentiment towards establishing a new cooperative bank.

"We wanted to explore whether conditions have matured and if there's room for a new nationwide cooperative bank that could counterbalance the current situation where almost two banks control 80% of the system in Cyprus," he explained.

Subsequently, on March 15, 2022, the first General Assembly of the society was held, where a 19-member Board of Directors was elected, with Hambas as president.

After consulting experts on the establishment of new cooperative banks, the terms were drafted, and a tender was issued, with four companies submitting proposals. After evaluating the bids based on public tender standards, the contract was awarded to PwC.

The tender was split into two parts, with one focused on the feasibility study, which aimed to determine whether a new cooperative bank could operate in Cyprus. The study revealed that such a bank is viable within a five-year plan, while a stress test, similar to those used by commercial banks, was also conducted.

Hambas highlighted that public awareness meetings have already started, with the first held in Lympia, including members of Parliament. He stressed that political support is necessary as amendments to the Cooperative Law will be required.

At the same time, representatives of the society have met with both the Central Bank of Cyprus and the Cyprus Securities and Exchange Commission (CySEC). Hambas emphasized that constructive meetings were held with both former Central Bank Governor Constantinos Herodotou and his successor, Christodoulos Patsalides.

Regarding the meeting with CySEC, Hambas noted that it was clarified that any public offer with more than 150 shareholders must issue a prospectus.

"We are now at the stage of exploring the processes to understand the costs and how to prepare the prospectus," Hambas said, adding that the necessary procedures required by state institutions for the creation of a new small cooperative bank are being followed.

Hambas made it clear that the new cooperative bank would not operate at the scale of the previous cooperative, which was the second-largest bank in Cyprus after 2013. "We will build step by step, carefully, to avoid repeating the mistakes of the past," he added.

He emphasized that the goal is not to become a systemic bank. "We aim to be a cooperative bank that puts people at the center," Hambas said.

Efforts will be made to leverage technology to keep operational costs low, and the bank will seek to hire qualified personnel while also aiming to include young people on the Board of Directors that will be submitted to the Central Bank and the European Central Bank.

Regarding the bank's lending policy, Hambas said the focus would be on student, educational, medical, and housing loans, as well as green development loans, renovation loans, and loans for the primary sector.

He particularly stressed the potential in financing the primary sector, noting that from 2004 to 2024, €1.2 billion was invested in land cultivation.

It is noted that under the law governing banking operations, a license to operate a credit institution requires separate own funds or initial capital of at least €5 million.

"There is no other way than issuing shares. We conducted market research, which revealed significant data regarding customer satisfaction with banks and deposit attraction," Hambas said, adding that further potential exists since the study was conducted two years ago.

He also mentioned that research is being conducted to select the contractor, without ruling out the possibility of selecting a second contractor if necessary.

Lastly, Hambas stated that regional meetings will continue, with upcoming meetings to be held in Arediou, the municipality of Latsia – Geri, and Limassol.