The agreement, which came in response to the backlash caused by the decision of the former state-owned Cyprus Cooperative Bank to setoff loans with deposit accounts of customers, will allow the immediate reactivation of the affected accounts. It will apply in 3,670 cases of individuals and 889 to companies, Hellenic Bank said on Thursday.

The decision followed “intensive discussions and consultations with the Ministry of Finance and the former Cyprus Cooperative Bank,” Hellenic added. Affected facilities include chequebooks, standing orders and cards.

“In the light of the definitions of European Central Bank (ECB), which are also applied by Hellenic Bank, the overdraft facilities were classified as non-performing since they were linked either directly or indirectly to non-performing loan(s),” the statement said.

“We will inform all affected customers,” said Hellenic, which following the acquisition of the Co-op’s operations became Cyprus’ second largest bank. “The vast majority of customers will be informed via SMS or by telephone. A small number of customers that do not have any other contact details will be informed via mail”.

A week ago Financial Ombudsman Pavlos Ioannou said that the former Co-op had acted in violation of the law in offsetting thousands of deposits with loans classified as non-performing.

Source: Cyprus Mail