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Cyprus Cooperative Credit Institutions approve salary reductions saving 16.5 million

17 January, 2014

Cyprus Cooperative Credit Institutions (Coops) approved a salary reduction scheme saving €16.5 million from its wage bill as part of a consolidation effort, a precondition for a €1.5 billion capital injection to plug its capital shortfall.

Speaking at a press conference, President of the Committee of the Cooperative Central Bank (CCB) Nicolas Hadjiyiannis described the agreement as historic.

"The agreement shows the cooperation between the stakeholders to help achieve the common goal of regrouping and recovering the Coops on a sustainable basis. This objective requires a joint effort, sacrifices from all for the sake of the Cooperative Movement, our financial system and our country," he said.

The Coops were bailed out with a €1.5 capital injection by the government which in turn applied for a financial assistance to rescue its banking sector following massive losses as a result of the Greek sovereign debt haircut and soaring non-performing loans due to the financial crisis. The bailout agreed last March by the Eurogroup provided for an unprecedented haircut of uninsured deposits to recapatalise the island`s two largest banks. The Coops have been exempted.

According to Hadjiyiannis salary reductions will save 16.5 million from the Coops wage bill.

"Our aim is to operate with maximum efficiency which would yield profits and allow us to exercise the credit policy necessary for the Movement and for the economy," he added.

The salary reductions deal has been so far approved by the trade unions of the 2,700 employees in the Cooperative Credit Institutions but not by the remaining 300 employees working in the CCB which are members of the Bank Employees Trade Union (ETYK).

Hadjiyiannis underlined that the agreement should be approved by ETYK before the visit of a Troika (EC, ECB and the IMF) mission on late January for the third review of the Cyprus proramme implementation.

Noting that the same reduction should apply for all Coops employees, Hadjiyiannis stressed that "we cannot have two-speed employees."

Furthermore, he added that next week the CCB will announce a targeted voluntary retirement scheme aiming at attracting 300 retirements that would slash a further €14 million from the Coops wage bill as of 2015.

Concluding, Hadjiyiannis added that the CCB Committee will approve next week the updated restructuring plan which will be sent to the Finance Ministry and the Central Bank of Cyprus (CBC) and to the European Commission DG Competition for final approval. The approval by the DGCOM is a precondition for granting €1.5 billion, which have already been disbursed and deposited at the CBC.