Brussels, 24/02/2014 (Agence Europe) - On 24 February, the European Commission found recapitalisation and restructuring aid measures for cooperative banks in Cyprus and their central body, the Cooperative Central Bank Ltd. (together “the cooperative banking sector”) to be in line with EU state aid rules. The cooperative banking sector is heavily burdened by the poor quality of its loan book, due to careless lending in the past. The measures will bail out cooperative banks to the tune of €1.5 billion to cover losses (more than 40% of loans are non-performing) and build up capital. The restructuring plan drawn up by the Cypriot government with the European Central Bank and the International Monetary Fund constitutes a major overhaul of the structure and commercial practices of the group. The one hundred or so cooperative banks, formerly owned by their clients, will be slimmed down to 18 via mergers and they will be owned and controlled by the cooperative central body, which will in turn be owned by its new 99% shareholder, the state. Adequate risk management, loan underwriting and claim management policies will be developed. Managing actively the large amount of non-performing loans through a newly established specialised division is a key component of the plan. New management teams are in the process of being appointed, both at central and at individual bank levels. The first measures have already been introduced and the Commission will closely monitor implementation of the rest of the plan. (FG/transl.fl)