Why Cyprus Cooperative Bank’s Fall Meant a Boost in the Economy

The spotlight has been on Harris Georgiades, the Minister of Finance for Cyprus over the past few months with many accusing him of the “death” of the CCB.

The sitting minister is being accused of making moves that led to the fall of the island’s 2nd largest bank, the Cyprus Cooperative Bank (CCB). In response to critics and against all the odds, Mr Georgiades still holds onto two significant accomplishments that may see him through this condemnation.

The History of CCB’s Struggle

Things flew off the handle when the Single Supervisory Mechanism (SSM), the watchdog for European Central Bank forced the CCB to shut down its operations.

Having operated under the cooperative banking structure until 2013, the CCB was lucky to escape the “bail-in” charges imposed by the group of global lenders ( i.e., the IMF, the EC and the ECB) on Cyprus and  two of its central banks (Cyprus Popular Bank and Bank of Cyprus) as a strategy to reach the goals of their Economic Adjustment Program. Instead of insisting on the bail-in payable to unsecured depositors (commercial firms with deposits exceeding €100,000), the state pressed €1.5 billion into recapitalising the bank thereby holding most of CCB’s shares, with a 99 per cent controlling interest.

A year and a half later, the watchdog requested the bank’s shareholders to add an extra €175 million ($201 million) to boost its capital base because of inadequate provisioning. The CCB recorded high rates of non-performing loans (NPLs) which ruined its bottom line even further.

The CCB seemed to weather these storms until the last quarter of 2017, but the high rates of NPLs never went down according to a sagepay review. It was ECB’s Dec. 2017 review into the bank’s operations that revealed CCB’s hopeless future. Findings showed the need for an extra capital worth €600 million.

Soon after, in March 2018, Hellenic Bank announced that it would acquire CCB and take over most of its assets and liabilities.

CCB’s Fall Brought Us Something to Celebrate

On September 14, however, Georgiades and the regime he served in got the perfect chance to rebuild their reputation when Standard & Poor’s (S&P) boosted the nation’s rating to investment grade for once in six years.

S&P noted in its official report that the move by the Cypriot authorities to get rid of CCB’s bad assets significantly reduced the level of non-performing bank assets in the banking industry, even if it came at the cost of 15 per cent of the economic output. Everyone realises that the authorities and Mr Georgiades didn’t do such a bad thing after all.

On Sept. 17, the procedure for the launch of the 10-year Euro Medium Term Note (EMTN) bond got underway. This was the minister and the Public Debt Management Office’s way to make the most out of S&P’s achievement. The aim was to raise €1 billion at an interest rate lower than 2.5 per cent. Two days later, by the time the launch was complete, the government had collected €1.5 billion with a 2.4 per cent interest rate.


After all, the minister didn’t do such a bad thing doing away with CCB. These two results are more acceptable than bearing the liabilities of having CCB around.

Author Bio: Payment industry expert Taylor Cole is a passionate merchant account expert who understands the complicated world of accepting credit and debit cards at your business. His understanding of high risk merchant account in the uk has helped thousands of business owners save money and time. 



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