Co-ops to reduce lending rates on agricultural and housing loans

The co-operative sector will soon reduce agricultural loan rates by around 2.0 per cent, it said on Wednesday.

Head of strategy and communications Yiannos Stavrinides said co-ops will also cut their housing loan rates in combination with a reduction in deposit rates.

The housing rates will be reduced at a later stage, Stavrinides said, without however providing a specific timeframe.

Cooperative Central Bank (CCB) chief Nicolas Hadjiyiannis told journalists: “We acknowledge that the role of the cooperative sector is not simply to tackle today`s financial and banking crisis, but to assist the prospects of the country.

We do not simply aim to be a typical financial institution, we assume our responsibilities and we are fully aware of our purpose.”

He said new loans should contribute to restoring the economy and to more solid growth.

Hadjiyiannis also said the co-ops would move closer to the European cooperative banking sector through a more active participation in the European Association of Cooperative Banks.

“The new supervisory framework, the current challenges in the economy and the direction we wish to follow demand the adoption of best cooperative practices from Europe,” he said.

Initially the cooperation with European institutions would be in the field of technical know-how and exchange visits. “But we would certainly not exclude entering the field of syndicated loans,” he said. “On the contrary, we would pursue this in the medium term, if they are interested.”

Yiannis Stavrinides, head of the CCB Strategy and Communications Service, said the bank hired the services of Boston Consulting Group to assist the sector to implement best practices, strengthen good governance and enhancing its banking products.

He said it was too premature to explore the possibility the CCB to start buying back its share capital from the state.

The co-operative sector was nationalised in 2013 as the government injected €1.5 billion to cover its capital shortfall. The funds were part of a €10 billion bailout Cyprus concluded with the Troika of international lenders. (CNA)

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