Commerce Minister George Papanastasiou on Thursday offered his support for the establishment of a new cooperative bank.

“The government supports the initiative, and I will undertake, as an obligation, to also obtain the position of the finance minister,” he told the House audit committee following the submission of a report into the matter by cooperative society chairman Panicos Hambas.

“The government is not neutral and will make sure to support it in practice after consulting the finance minister,” he said, before adding, “my father is a born cooperative man, and I probably would not exist if he were not a cooperative man”.

He added that the project to create a new cooperative bank “has difficulties”, but said that “when there are the right people and there is the motivation, as there is here, it can be implemented”.

In addition, he said, the minimum required capital of €5 million to set up such an institution can be “easily found under the conditions in which we find ourselves”.

He said such an institution must be viable, and that “it is not a matter of emotions to create a cooperative credit institution, which through feelings of cooperativity offers access to money to those in need and never returns it”, warning that “such an institution would be dissolved in a short period of time”.

Additionally, he said, a well-run cooperative competitor can “reduce profit margins, so that there can be competition [for the banks] which will work with lower profit margins”.

He went on to say that at present, the group which will form the new cooperative bank is currently in the process of collaborating with “a person who will take over the coordination of the entire project”, with the aim of preparing a prospectus, selecting a financial advisor, and then submitting a formal application to the Central Bank of Cyprus.

This effort, he said, is being supported by cooperative companies in the commercial sector, cooperative holding companies, trade unions, educational organisations, associations of retired teachers, the police association, the firefighters’ association, the union of communities, agricultural organisations, and others.

MPs were in favour of the idea, with many pointing out the current lack of competition in Cyprus’ banking sector.

Committee chairman and Diko MP Zacharias Koulias said Thursday was a “historic day for the place”, and said the committee had been spoken to “by the people who are regenerating cooperatives from their ashes”.

“Very soon, the Cypriot people will have their cooperative movement back again … Everything is being done in the right way under the correct legal regime and under the supervision of the Central Bank,” he said.

Disy MP Savia Orphanidou said “significant progress has been made” regarding “preparations to establish a new cooperative credit company, at the initiative of our agricultural and trade union organisations”.

“The strengthening of competition in the banking sector is a welcome goal which we must pursue. The creation of a new bank, of a cooperative nature, will significantly help people and will support our economy more broadly,” she said.

She added that “everyone understands the great and high demands for the establishment of a new bank”, given the relevant European regulations brought in following the 2009 Eurozone crisis, and added, “we understand that efforts are being made to fulfil all the demands”.

Akel MP Christos Christofides said that “there is indeed an impossible situation in Cypriot society” regarding the current state of the island’s banking sector, and that as such, “what is truly impossible is to continue as we are today, with an oligopoly of commercial banks”.

Those banks, he added, are making “excessive profits at the expense of the Cypriot people”.

He said the cooperative movement had for many decades offered the best alternative to commercial banks, “despite attempts to slander it”.

He decried “a campaign which has taken place in recent years and an attempt to build an ideological hegemony in society which says that this monopoly situation, these super-profits made by the banks … is all European”.

Volt MP Alexandra Attalides, said that “financial banking cooperatives within the European Union are based on strong legal frameworks, enhancing community participation and providing inclusive financial services, while strengthening local economies and financial stability”.

On this matter, she said the EU has adopted regulations which “ensure members’ rights, governance structures, and operational transparency” within cooperative banks.

“This initiative will emphasise member ownership and democratic governance, allowing members to have a direct say in operations and decision-making processes … It will strengthen the people’s trust and loyalty compared to traditional banks,” she said.

She added that a new cooperative bank will provide basic financial services, “often with lower fees and competitive interest rates which are particularly beneficial for undeserved communities and groups of the population which do not have access to traditional banking services”.