The total fiscal burden on the state resulting from support for the former Cooperative Bank for the period 2014–2030 is estimated at approximately €2 billion, according to the Special Report of the Audit Office, dated November 4, 2026. The audit of the effectiveness of KEDIPES’s asset management identifies weaknesses in the supervision of Altamira Cyprus, in the valuation and sale of assets, as well as in procedures concerning the company’s staff.
According to the Report, the estimated liability includes €1.5 billion from the initial recapitalization of the Cooperative Bank, following the recovery of €175 million, an additional €340 million that is not expected to be repaid from the 2018 state support, and approximately €200 million relating to the estimated financial burden from low-interest financing. The Audit Office clarifies that the final cost will depend on the progress of recoveries through 2030, at which point a portfolio with a face value of €2.4 billion is projected to remain, though this does not mean that the entire amount will be recoverable.
ΣΧΕΤΙΚΑ ΑΡΘΡΑ
Where did the €3 billion in collections go?
From the start of KEDIPES’ operations in September 2018 through March 31, 2026, total cash inflows amounted to €3.009 billion. Of this amount, only 56%—or €1.68 billion—went to the state coffers as repayment of the support granted to the Cooperative Bank. Total repayments of state support amounted to €1.765 billion, including expenses for the “Rent in Lieu of Installments” and other forms of repayment.
Of particular interest are the operating and management costs of the assets, which totaled €826.8 million and accounted for 28% of total expenditures. Of this amount, €259.2 million related to fees paid to Altamira Cyprus, €162.5 million to personnel expenses and voluntary retirement plans at KEDIPES, while €152.1 million related to payments to the government in the form of VAT and asset management fees.
The Agreements with Altamira and Regulatory Gaps
A significant portion of the Report focuses on the collaboration with Altamira Cyprus, which currently operates under the name doValue Cyprus. The Audit Office notes that the original 2017 agreement was concluded without an open bidding process and assesses that its financial terms were not in line with market conditions. In contrast, the new agreement, signed in 2022 with retroactive effect from January 2020, significantly improved the financial terms. The expected savings were estimated at €77.6 million, or 24%, though these are not considered guaranteed, as a significant portion depends on the completion of specific portfolio sales transactions.
At the same time, serious shortcomings were identified in the monitoring of the server’s performance. Specifically, of the 26 non-financial indicators in the initial agreement, 21 were either not implemented or could not be effectively monitored. As a result, for a period of more than four and a half years—from January 2018 through October 2022—there was no adequate control framework in place. The Audit Office acknowledges, however, that the monitoring system has improved since the new agreement was signed.
Losses of up to €12 million from equity holdings
The findings regarding the divestiture of the former Cyprus Cooperative Bank’s holdings in Cooperative Commercial Companies are also cause for concern. The process was completed in 2022, nearly four years behind schedule, without an independent update of the 2015 valuations. Based on the Audit Office’s calculations, the estimated negative financial impact ranges between €9 million and €12 million. This estimate is conditional, as it is based on the assumption that the initial valuations, after corrections, continued to reflect the actual value of the holdings at the time of sale. These specific transactions involved decisions by SKT and SEDIPES, and not exclusively by KEDIPES.
The disposal of real estate was also scrutinized. The Audit Office expresses reservations regarding the fact that the overwhelming majority of sales are not subject to KEDIPES approval, as the relevant threshold has been set at €5 million. At the same time, it was found that during the 2018–2023 period, €9 million was paid in real estate agent commissions, and in all cases examined, the maximum rate of 5% was applied. Furthermore, when evaluating bids, related sales expenses were not taken into account, with the result that the highest bid was not necessarily the most economically advantageous option.
Hiring, Promotions, and Retirement Plans
Weaknesses were also identified in personnel management. The Audit Office identified cases of hiring in which the prescribed procedures were not fully followed or the selected candidates did not meet all the required qualifications. Of the 48 external hires made between September 2018 and December 2024, 15 resulted in resignations within a short period of time, while two contracts were terminated during the probationary period. At the same time, cases were identified where promotions were granted without the assumption of upgraded duties, while as of December 31, 2024, nine Services and Departments had Directors or Heads without subordinates.
Special mention is made of the three Voluntary Separation Plans implemented between 2021 and 2023, at a total cost of €13.3 million. Through these plans, 85 employees left the organization; however, the first two failed to meet the established staff reduction targets, while no specific numerical target had been set for the third. The Audit Office highlights the need to review employee benefits, given that KEDIPES is no longer a banking institution.
KEDIPES’ Response
In its response letter, included in the Report, KEDIPES states that it takes the Audit Office’s findings and recommendations seriously, noting that several of the issues had already been identified by internal audits and that corrective actions had been initiated. It also emphasizes that certain decisions were made prior to its establishment, while collective bargaining agreements limit the ability to make unilateral changes to labor matters. According to its management, the company has repaid more than €2 billion to the state and has settled an additional €355 million in liabilities from the former SKT, arguing that it has already more than met the recovery target expected for 2018.
For his part, Auditor General Andreas Papakonstantinou acknowledges in the foreword to the Report that “KEDIPES’ management is making efforts to recover state aid,” while also pointing out the constraints the company inherited from previous agreements and labor commitments. The key issue for the coming years remains the ability to maximize recoveries through 2030 and to capitalize on the portfolio that will remain under management after that date.
View the report here
