Newsroom / CNA
The Cyprus government says it is depositing €2.5 billion at the Cooperative Bank of Cyprus, as part of a broader plan to eliminate uncertainty among depositors in the wake of a privatisation bid.
Government spokesman Prodromos Prodromou said in a statement on Easter Tuesday that the move “secures completely the stability of the banking system” which would allow much needed reform to move ahead based on requirements from the European Union.
The deposit is also shielding the ongoing tender for the privatisation of the nationalised cooperative sector, which has been struggling with non-performing loans and uncertainty among the public.
The deposit is also shielding the ongoing tender for the privatisation of the cooperative sector
“This way, the process with investor interest seen during the public tender will go forward and will be completed in April,” Prodromou said.
The €2.5 billion deposit includes issuing bonds to the CCB and utilising state cash reserves, according to CNA sources, who also say the state could boost CCB’s assets while supporting deposits.
Prodromou also said that the last few years under President Nicos Anastasiades’ administration there has been a steady rebound of the economy.
Last month, the CCB launched a tender for the expression of interest offering a stake in the bank’s share capital or taking over assets and bad loans.
But it is difficult to ascertain what kind of interest exists among investors and it won’t be until May that final proposals would be submitted from those who are seriously contemplating a future with the bank.
The government’s move is also seen as a reaction to deposit outflows linked to the uncertainty of the CCB.