The Cyprus Cooperatives Credit Institutions are completing their restructuring plan, a precondition for a capital injection of €1.5 billion granted by the state.

Giorgos Iosif, Chairman of the Committee of the Cooperative Central Bank told CNA that the plan will be submitted to the Central Bank of Cyprus and the Finance Ministry.

“The last instructions were given yesterday and the last gaps are being filled,” Iosif said, adding the plan will be ready by tomorrow. He said the plan should be submitted to the CBC and the Finance Ministry by September 30 as provided by the Cyprus adjustment programme. The plan will be also submitted to the Troika for approval.

The state will acquire 99% of the share capital of the Cooperative Credit Institutions as it will inject €1.5 billion to cover their capital shortfall for the next three years on the basis of a due diligence audit carried out by the US audit firm Pimco. The €1.5 billion is part of the €10 billion financial assistance programme agreed last March with the European Central Bank, the European Commission and the IMF, collectively known as the Troika. The capital injection will be covered by the programme’s second tranche already approved by the Eurogroup and to be disbursed shortly.

Iosif noted that the plan, already approved by the Committee, will include a road map for the mergers of the individual CCI`s whose number will be reduced from 93 to 18 by 2014. According to Iosif, the plan also provides for spending cuts and a ceiling on the income to revenue ratio.

As part of the capital injection, the members of the Committee of the CCB submitted their resignation as the Ministry of Finance will appoint a new committee and a chairman.

On the voluntary retirement scheme, Iosif said that this is being discussed with the Finance Ministry, noting that the aim is to render the plan attractive to the Coops` employees.

He noted however, that in case the plan is not successful bigger salary cuts will be imposed in the context of the restructuring plan, adding that salary cuts is unavoidable as is provided for in the European Commission state aid rules.

According to state aid rules, the Coops cannot return to their previous ownership, before five years, while they will pay the state with 10% of their debt until the repay the 1.5 billion which will enable them to buy back their shares from the state.

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