The Coops were nationalized when the Cypriot government injected €1.5 billion into sector to cover its capital shortfall, calculated in the adverse scenario of a due diligence exercise, carried out by a US asset management firm, Pimco, as part of the conditions for a €10 billion bailout Cyprus received from its international lenders. As part of bailout conditions, the Coops implemented a restructuring plan that will see their number reduced from 193 to 18 by the end of March. Hadjiyiannis who briefed Cyprus House President Yiannakis Omirou on developments in the Cooperative sector, said NPLs are a "huge challenge."

Noting that NPLs in the sector have reached 45% of its loan book, Hadjiyiannis said the rate of the NPLs rise was relatively low but already it has reached a big NPL percentage. "What is important is to ensure that when we deviate from Pimco’s scenario, we do it in a positive way,” he said. If NPls rise above €1.5, the Coops may need additional capital injection, he explained.

Hadjiyiannis noted that the CCB has put in place a loan restructuring unit that will be staffed the soonest possible to tackle the rising NPLs trend. "I believe that with our effort and our actions we could address this great challenge," he added. On his part Omirou referred to the Coops’ contribution to Cypriot society, expressing confidence in the Coops under its new leadership will mark further growth to the benefit of the people.

Source: Financial Mirror