Nicosia, Cyprus. Fiscal council member Marios Clerides said Cyprus needs “ethical banking” as plans advance for a new cooperative bank, stressing that lenders should consider borrowers’ ability to repay rather than rely solely on collateral.
He said the proposed institution must address governance issues and avoid political influence within its board of directors.
Governance concerns
Clerides said Cyprus’ financial markets need banks that consider not only profits but also borrowers, taking account of customers’ repayment capacity.
However, he said the main challenge facing cooperatives lies in their governance. He cited the “one member, one vote” principle, saying it can expose weaknesses in the political system when parties seek to place their own representatives within an organisation.
He also questioned whether it is fair for an investor who has invested €100,000 to have the same voting rights as someone who has invested €100.
Licensing and European examples
Clerides said those behind the proposed bank should address governance matters and ensure that its board has no political agendas while implementing ethical banking principles.
Asked whether it would be feasible for the Central Bank of Cyprus and the European Central Bank to issue a licence, he said they should try, noting that cooperative banks operate in other European countries.
He cited the Netherlands’ Radobank, France’s Credit Agricole and Austria’s Raffaisen Banking Group as examples. Bulgaria’s Central Cooperative Bank, which has an office on Makarios Avenue in Nicosia, is not a cooperative despite its name.
“The issue is how we can make it work in Cyprus,” Clerides said.
Share sales
The Cyprus cooperative holdings and promotion company Ltd was authorised by the Cyprus Securities and Exchange Commission on Friday to begin selling shares. The company is due to start the sales on Wednesday.
