SSM seems to favour the merger of Coops with another commercial bank, FinMin says

The EU banking supervisor, the Single Supervisory Mechanism (SSM) seems to favour the merger of the performing part of the state-owned Cyprus Cooperative Bank (CCB) with another banking institution, Finance Minister Harris Georgiades has said.

Saddled with non-performing exposures (NPEs) amounting to Euros 6.2 billion roughly 50% of its total loans and facing mounting capital needs due to new assumptions concerning the valuation of collateral connected with the its NPEs, the CCB launched a bidding process offering prospective investors with two options. Either to acquire the whole banking entity through a capital raise or to acquire performing part of the bank, that is, performing loans, deposits and part of its banking network.

Speaking to a joint meeting of the parliamentary committees of Finance and Expenditure Control Georgiades said the scenario involving a merger of the performing part of the CCB seems to be preferred by the SSM, adding that mounting capital needs due to the change of assumptions render the first option more remote.

The SSM, as the supervisor of the systemic banks of the Euro area will be called on to approve the transaction.

I would not rule out the possibility the SSM to favour the option involving a merger (of the CCB) with another banking institution even if offers to acquire the whole bank are on the table, Georgiades said.

On his part Yiangos Demetriou, head of the Central Bank of Cyprus division for supervision said that given the supervisory needs the option concerning the acquisition of the whole banking entity does not seem to be on the table.

Furthermore, Nicolas Hadjiyiannis, the CCB General Manager said that the bank lost deposits amounting to Euros 1.9 billion in the first three months 2017, adding that deposit withdrawals in March amounted to Euros 700 million. Those days were a nightmare, he said.

He added that after the government’s move to deposit Euros 2.5 billion things calmed down with deposit withdrawals declining.

Source: Cyprus News Agency