The reestablishment of the Cooperative Movement will strengthen competition in the financial sector and bring prosperity to citizens and benefits to the economy, Argyris Alexandrou, President of the Association of Cypriot Economics Professors (SOKAK), told CNA.

“The effort being made is certainly for the greater good, and we applaud it. It is positive that it is being reestablished in such a short period of time,” he added.

He noted that because the Cooperative Movement will have a social purpose, it will benefit the people and the economy in general.

“When the Cooperative was established, it was created for a good cause and to protect vulnerable and poor social classes,” he added.

Mr. Alexandrou said that the Cooperative is a nonprofit organization and is not like banks.

“Therefore, it will benefit society and citizens,” he noted.

When asked whether there would be any impact on banks, Mr. Alexandrou said that this development would also push commercial banks to become even more competitive.

Specifically, he noted that the presence of yet another bank, such as the Cooperative Bank, would provide greater incentive for more and more competitive businesses to emerge, thereby securing better interest rates for citizens.

The President of SOKAK also said that, following the deposit haircut, banks are generating revenue from sources other than interest on loans.

They no longer rely solely on the interest they earn from the loans they’ve granted, because there are many other fees, he added.

He noted that today, if you walk into a bank to conduct a banking transaction or maintain a checking account, you are charged a fee.

“Banks are now secure, which is why they’re making such huge profits,” and “their financial stability is not at risk,” he added.

When asked to comment on the fact that a large portion of the 42,000,000 new shares to be issued for the new Cooperative Bank will be distributed to the public, Mr. Alexandrou said that since it is being done for the public, so it is more appropriate to allocate the shares to the public, and he added that whoever holds shares in a company is the one who votes at the General Shareholders’ Meeting, which is where decisions are made.

“So it is more appropriate to give them to the public so that they have a say and a voice in the decisions that will be made” regarding the Cooperative, he concluded.

Source: CNA