Taxpayers may still have to pay even after Co-op sale (Update-1)


(Adds finance minister comment in seventh paragraph)

By Stelios Orphanides

Cypriot taxpayers are still not done with the state-owned Cooperative Bank and may be asked to cover future contingent liabilities of unspecified value, experts say.

“I am not sure whether we are done with those €4bn, there may be a need for more money,” said economist Marios Clerides, who served as the Co-op’s top executive until mid-2015.

He was referring to the €2.35bn government bond issued a month ago and the capital injections of almost €1.7bn that preceded it in 2014 and 2015.

The latest bond issue aimed at allaying concerns over the lender’s future amid fears of the need of additional provisions that would cause a capital shortfall.

Clerides said additional support may be required depending on the outcome of the negotiations initiated by the Co-op to sell its assets, which already attracted interest from three potential buyers, Hellenic Bank, Cyprus’s third largest lender, and two US funds.

“The buyers are likely to press for a lower price for the assets they will acquire in order to achieve a higher return,” he explained, adding that possible layoffs of unneeded staff could also prompt the government to offer compensation to affected workers at the lender, in which the government has a stake exceeding 99 per cent.

On Friday, Finance Minister Harris Georgiades signalled that the government was ready to jump in and support affected staff.

“The state has the capacity and willingness one way or another to offer security to workers,” the minister said after a meeting with Andreas Matsas, the head of SEK, one of the two largest unions in the private sector, according to the Cyprus News Agency. “We are in anticipation of investor interest and therefore there’s nothing concrete to be said”.

The government has acted in a similar fashion already in the past with companies that went out of business, such as in the case of Cyprus Airways or its subsidiary Eurocypria.

Moody’s Investors Service, which downgraded the Co-op’s baseline credit assessment from a “caa2” to “ca” last month, just days after the lender announced its intention to seek investors, did not rule out further taxpayer’s money flowing into the bank.

“The potential piecemeal sale of Cyprus Cooperative Bank reflects its solvency challenges and our view is that the bank has a provision shortfall which will have to be filled either through a capital increase, with funds coming from private investors or the government, or through the sale of the bank’s assets and liabilities,” said Moody’s analyst Melina Skouridou in an interview.

The bank which in exchange for the issued bonds received a €2.5bn liquidity injection from the government in the form of a deposit backed by collateral worth €7.6bn comprising mainly of non-performing loans, made slow progress towards reducing its delinquent loans in the years following the crisis.

This was partly because of the foreclosure and insolvency legislation, which was rendered toothless by lawmakers.

Former Hellenic Bank executive Yiannis Telonis said that the liquidity injection from the government showed that the problems the bank was facing “were deeper than assumed”.

“The bank did not have clear targets,” he said. “It was initially aiming at a listing at the Cyprus Stock Exchange, then they were talking about donating stock to its customers and later switched to a listing in Ireland,” Telonis said.

“The buyout is not going to be an easy undertaking, but it has to be successful otherwise we are heading towards adventures,” he added without specifying.

The Co-op has given an extension of the deadline for the buyers to submit binding offers until mid-May.


About Author

Stelios Orphanides is a journalist at To contact Stelios Orphanides: [email protected]

  • A is B

    Put all the banks in foreign ownership, no locals.

    • Bob Ellis

      Why do we need bank, most money is dodgy and is floating around in cash form. We only need banks for borrowing money we have no intention paying back, that’s what they are there for isn’t it ?

      • A is B

        You’re not wrong.

      • SuzieQ

        Of course.

      • Adele is back x

        Spot on Bob.

      • Neroli

        Very true!

    • GSP

      Show me any foreign company who would invest in an organisation that is forbidden, by law, to reclaim it’s debts.
      Only in the twisted minds of Cyprus politicians does such a concept appear sane.

      • A is B

        OK, just wishful thinking for the benefit of all

  • Barry White

    Of course the taxpayers will be required to throw more money into the Coop pit. That is what they are there for, isn’t it. When they run out of taxpayers, who ya gonna call ?

    • Neroli

      Ghost busters!!

    • Philippos

      Make more taxpayers, Silly!”Get your Cyprus TIC here” Very cheep Very Coop!

  • Bob Ellis

    If my business were was rotten to the core, mismanged and defrauded can I keep afloat a the taxpayers expense ? Anyhting other than a deposit is an investment, investments can go up as well as down!

  • John Henry

    After sucking each well dry eventually the main well will dry up too. What happens then? Perhaps the Government will sell the use of its logo for 10 years to another country.

    • Bob Ellis

      I thought the country, it’s morals, justice system and constitution were sold to the higest bidder a long time agao.

    • Bernard Smart

      Putin could pick up the whole island for €200bn

      • Barry White

        Putun can just call in his €2.5 billion loan. Job done.

  • n3wbi3


  • costaskarseras

    It is not only the Cypriot taxpayer, but working people across the world who are paying a heavy price for the neoliberal policies. The bankers were let loose to do what was serving their personnel interest. They were given a free hand and received huge bonuses and we are paying in unemployment, cuts in health services and education, housing and even road maintenance is neglected. The Co-op bank in Cyprus resembles the Royal Bank of Scotland which has cost the British taxpayer £60bn since the 2008 bailout. According to the National Audit ­Office the British Government has recovered 5% (£58billion) of the £1.2 trillion bailout which was given to the banks during the credit crunch.

    Never before did the Cypriots suffer such an economic meltdown with catastrophic and long lasting consequences, even after the NATO-Turkish invasion. People in other countries didn’t fare much better, you only have to take a stroll in any major city around the world to see the existing misery. Even children in rich countries go hungry.

    • almostbroke

      Your old ‘comrade ‘the fat toad led the country over a financial cliff and at the same time was indirectly the cause of the deaths of people at Mari , just so he could pander to his Russian masters , it’s not all neo liberalism you know . They are all ‘at it ‘

  • Ιοαννις Γεωργιου

    Am sure Marios knows well what he is saying , sources in the EU are estimating the cost to be around 6 bln , i mean wtf even u hire people to deliberately do damage am not sure they can succed that well

  • Bananaman

    Harry robbed the lot of ya not just the odd branch on a motorbike

  • almostbroke

    As night follows day the taxpayer will have to ‘pony up ‘ more money but the Co Op is only one of several scams in Cyprus that the taxpayer ends up paying for , nothing new there !!!!

    • Central Government squandering Taxpayers money!

  • Adele is back x

    Sickening…. so the poor buggers like me have to scrimp and save so the tosses can live their lovely life….Pass me the sick bucket.

  • Douglas

    What impact would it have if the Co Op Banks were closed down for good,there must be a reason for throwing good money after bad ?

  • Central Government squandering the Taxpayers money!

  • mongasz

    By analogy: when a patient has cancer you need to remove it with drastic chemo or surgery before it metastasises and infect other organs causing painful death.
    Same here, the moron we call minister of finance and his inadequate cronies at the ministry and the coop bank instead of removing the cancer of NPLs they treated it with aspirins wasting taxpayer in a bottomless pit….
    In addition the corrupt politicians in parliament did not help by making repossession of property/collateral almost impossible. This is because their big developer friends (or crooks) finance their parties and bribe them – this is why a banana state is the best way to describe the situation

  • Barry White

    Who can forget the word’s of the Tof: ‘ The Coop does not need a bail-in or taxpayers’ money.’