Excluded from the international capital markets and with its large banking sector at the brink of collapse, Cyprus agreed last March with the Troika of the European Commission, the European Central Bank and the IMF on a €10 billion bailout, which featured a haircut on deposits over €100,000 to recapitalize the island's two largest banks. The Coops have been exempted from the haircut. The new Executive Officer of the Cooperative Central Bank met with Troika technocrats, in Cyprus for the third reviews of the economic adjustment programme, to whom he presented the restructuring plan of the Cooperative Sector. "The technocrats were satisfied over the progress achieved so far and pointed out that what matters now is the implementation of the plan," a source under condition of anonymity told CNA.

The Troika technocrats focused on the creation of a centralized unit for the management of non-performing loans (NLPs) which reached €5.5 billion. The issue will be discussed in more detail in an upcoming meeting with senior Troika technocrats. The restructuring plan provides that the Coops will reduce its operating expenditure by €300 million within the next five years, whereas the Coops already slashed over approximately €16 billion for 2014 from its wage bill. The Finance Ministry will submit to the European Commission`s Directorate General on Competition the final restructuring plan, the approval of which is a precondition for the disbursement of the €1.5 billion. The submission of the restructuring plan is a significant milestone for the relaxation of the capital controls imposed in the island`s banking system since the agreement on the bailout last March.

The Coops next milestones, the announcement of a voluntary retirement scheme next Monday, the conclusion of the merges which will see the 93 Coops reduce to 18 by next March, the establishment and operation of the NPL management unit, the transfer of the €1.5 from the Central Bank of Cyprus to the CCB, the drafting of the Coops credit policy, as well as quantitative targets.

Source: Financial Mirror