The €42 million challenge and nostalgia clashing with strict regulations
The effort to revive the cooperative movement in Cyprus has now moved from theory to practice. Nevertheless, it is marked by a sense of romanticism and many unanswered questions.
The campaign has already begun with informational meetings in dozens of communities, from Astromeritis to Kalopanagiotis, capitalizing on Cypriot society’s need for—and nostalgia for—an alternative credit institution.
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As part of its outreach efforts, the Pan-Cyprus Cooperative Society for Participation and Promotion of Cooperativism Ltd. is essentially asking citizens to invest in this effort by issuing up to 42 million new shares at 1 euro each, with the ultimate goal of creating a new, “people-centered” Cooperative Bank.
But behind the emotional narrative, how realistic and sustainable is this vision today?
The Auditors’ “Warning Bell”
2026 is not 1980, so any nostalgia must be set aside—after all, we’re ultimately talking about a banking institution. Establishing a bank from scratch requires obtaining a license from the Central Bank of Cyprus (CBC) and the Single Supervisory Mechanism of the European Central Bank (ECB). The European regulatory framework is governed by strict regulations and controls.
It appears to be somewhat clear that the company currently seeking financing is not a bank. That is, this effort is merely the “vehicle” that will submit the application for its establishment. We emphasize “partially” because, as we will see below, the gap in financial—and not only financial—literacy may somewhat cloud our understanding of what is being attempted.
Second, as revealed by the study of the legally binding Prospectus—which spans over 140 pages—the starting point is already problematic.
Specifically, at the end of 2025, the company reported losses of €414,700 and had negative equity (-€39,821). As shown in the official financial statements, revenue from member dues was negligible: just €20 in 2023, €9 in 2024, and €535 in 2025. In fact, to date, the company has been kept afloat thanks to short-term loans from labor unions. While these loans totaled €45,000 in 2023, in 2024 the company was forced to write off €20,000 in debt by issuing shares instead of cash to the Famagusta Citrus Marketing Cooperative. Despite the debt-to-equity swap, the need for liquidity returned, with borrowing from trade unions skyrocketing again to €51,000 by the end of 2025.
A key finding, however, comes from the independent auditors themselves (HMI & Partners), who are sounding the alarm for all three years of its operation.
In their reports, they explicitly note that the loss indicates the “the existence of material uncertainty that may cast significant doubt on the Company’s ability to continue as a going concern.”
In short, without those 42 million, the venture simply cannot survive.
The “wasted” money
So what exactly is the citizen buying when they invest their money? They’re buying the risk of obtaining a license. However, if the ECB says “no” to the license, the Prospectus warns that the money returned to citizens will be significantly reduced.
When asked about this, the company’s president, Mr. Panikos Hambas, told Alpha on Sunday that during the licensing process, millions will be spent on executive salaries, systems, and professional services. As he acknowledged: “We’re working with experts—PwC, Global Capital, Athlos Capital, the lawyers—these people get paid; they don’t work for free. The money will be refunded after deducting the expenses.”
Confirmation of this “loss” is already recorded in the 2025 financial statements. Last year alone, €400,886 was spent on “other professional fees—study expenses,” plus €11,330 in legal fees and €2,380 in accounting fees. In essence, the company has already “burned through” nearly half a million euros on consultants, and the ordinary small investor from the village is being asked to finance 12–18 months of additional operating expenses for major auditing firms, all for a single application.
“Technological Illiteracy” and More
While the Company constantly urges citizens to read the Prospectus in order to make an informed investment, the practice in villages also raises questions.
Mr. Hambas acknowledged that the audience at these informational sessions consists of people over the age of 50–60+ who are grappling with technological illiteracy, an audience that struggles with digital identification. For this reason, at these on-site meetings, they ask citizens to bring “their ID, a bank card, and other documents so that experts familiar with the initiative can register them on the spot on the platform. “Since the application can only be submitted online, technical staff from the Company will be present at the gatherings to inform people on how to submit their application,” he added.
But how is it ensured that the retiree understands the legal risk? Mr. Hambas stated that a summary is provided and that “this is sufficient to inform them about the investment.” However, the Hellenic Capital Market Commission itself explicitly warns of the exact opposite in its 140-page Prospectus.
“The summary should be regarded as an introduction. Every investor must base any investment decision on a review of the Prospectus in its entirety.”
The Board of Directors That “Does Not Meet the Criteria”
However, even if the bank is licensed, its operations continue to have “gaps.” Although the narrative speaks of a 100% Cypriot-owned Cypriot institution, the Prospectus reveals that the bank will not have its own correspondent banking service, nor SWIFT, nor nostro/vostro accounts. All basic international transactions (wire transfers, foreign exchange) will be carried out through another partner bank abroad. Essentially, we are talking about an “outsourced” bank, a fact which, as the document acknowledges, increases operational risk and creates enormous dependence.
When asked to respond to this very point, Mr. Hambas tried to downplay the concerns, arguing that this would not pose an obstacle. “We will offer all banking products for all banking services. We will simply be a cooperative bank that is highly advanced in digital technology,” he stated.
At the same time, the strict cooperative model, where “1 member = 1 vote,” acts as a deterrent for large institutional investors. An entrepreneur who invests half a million euros would have exactly the same influence on decisions as someone who invested 100 euros.
So who will run this organization? Mr. Hamba’s response to this is that neither he nor the members of the current committee will serve on the board of directors of the new bank. “We do not meet the criteria to be on the bank’s board.” The team that currently manages the 42 million admits that it is not considered suitable by the ECB to manage those funds going forward, with Mr. Hamba emphasizing that, once the application is approved, individuals from the banking sector will be sought.
We shall see…
The Pan-Cyprus Cooperative Society’s venture is caught between the hopes of a society that longs for a more “more human” banking system and the relentless rules of the modern economy.
Whether they will manage to raise the 42 million euros by mid-November remains an open question. Mr. Hambas already appears to be laying the groundwork for activating Plan B—that is, a multi-month extension.
Mr. Hambas has also stated that, because the entire process is still ongoing, he cannot comment on the interest shown in acquiring shares in the new Cooperative, while clarifying that if the required amount is not raised by the end of the application period, “we have the right to extend the Public Offering by eight months, after first updating the Prospectus.”
The goal is to cover all regions by September so that people can be trained.
However, even if the funds are secured, the final decision-maker will not be found in the communities of Cyprus, but in the austere offices of the ECB in Frankfurt. Until then, the responsibility rests solely with each individual small investor, who must weigh whether the potential reward is worth the risk. We shall see…
