Insider Business CCB to pay a further €2 million in interest calculation error

CCB to pay a further €2 million in interest calculation error

The state-owned Cyprus Co-operative Bank (CCB) will pay up to €2 million to rectify an initial correction made to customer accounts who were excessively charged due to a mistake in interest rate calculation concerning customer loans for the period of 2008-2013, Financial Ombudsman Pavlos Ioannou told CNA.

Ioannou said the new correction concerns 150 bank accounts from the 11,000 initially identified to be burdened with wrongful charges concerning the basic lending rate, that resulted in the return of approximately €125 million to borrowers.

He added that according to CCB preliminary estimates, the additional amount to correct the new error may reach €2 million and is associated with loans that have not yet been repaid.

Ioannou said the new error was identified by his office following complaints by “many angry customers.”

In one case, he said, after addressing the initial mistake, the CCB reduced a customer loan by €14,000 but later charged the account with the same amount, adding that the CCB made these interventions without notifying its customers.

“Such practice, which brings about a sudden change in bank accounts, creates a shock of confidence in the banking system,” he said.

In May 2017, the CCB announced it would return a total of €111 million to 11,323 borrowers due to a mistaken application of the rate on loans linked with the European Central Bank basic rates or the Euribor.

Last June, the government announced that the CCB’s performing operations will be acquired by Hellenic Bank, while the CCB along with its non-performing loans and other assets will be transformed into a state-owned asset management company. The acquisition of CCB’s performing operations is expected to be completed by September.

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