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Cyprus Coop Central Bank head says early retirement scheme to begin

30 January, 2014

The Cooperative Central Bank, after the issuing of a decree by Minister of Finance Harris Georgiades, is proceeding immediately with the implementation of the voluntary early retirement programme, thus launching "a very ambitious but necessary five-year scheme for the rationalisation of expenditure, totaling €300 million for five years," Chairman of the Board of the Cooperative Central Bank Nicholas Hadjiyiannis has said.

In statements to CNA, Hadjiyiannis said the Cooperative Central Bank would like the early retirement programme to come into effect on Monday, and he sent a message for cooperation to the bank employees` union, ETYK.

Regarding the decree, Hadjiyiannis explained that, "because there has been no agreement with ETYK regarding the minimum wage cut of 15%, it was necessary to solve the problem in another way, in the framework that has already been locked, the rationalisation of expenditure, as provided for in the restructuring scheme, which is an obligation under the memorandum" for Cyprus` bailout.

Hadjiyiannis said that the framework included in the decree was the one implemented for the employees of the broader cooperative banking sector, totaling 2,700, who are represented by trade unions SEK, PEO and PASYDY.

"After this, we can proceed immediately with the implementation of the voluntary early retirement programme, in order to give the employees the opportunity to make their choices," he said.

He added that "the implementation of a very ambitious but necessary five-year scheme for the rationalisation of expenditure, totaling €300 million, begins."

Hadjiyiannis said "the reduction of expenditure will come from the minimum 15% cut of the employer`s costs, from the reductions that will come from the voluntary early retirement programme in the medium-term, and there will be even greater and more generous cuts of the remaining operational expenses," adding that the effort was to reduce the remaining costs by up to 40%.

"The total amount of the rationalisation of expenditure, of €300 million, shields the profitability of the Cooperative and this is a significant measure for securing the value of the recapitalisation amount of €1.5 billion, which is money they people of Cyprus borrowed in very difficult financial circumstances," he added.

Asked when the decree would come into effect, Hadjiyiannis said that for the proper implementation of all that is provided for in the restructuring scheme, "we must begin in January," adding that the rationalisation of expenditure should have begun in November," when there were some other cuts in expenses.

To questions regarding the future of cooperation with ETYK, Hadjiyiannis said "trade unionism, as is the cooperative movement, are great institutions," adding that "our aim is not confrontation."

"There is a common interest for the employees and the shareholders, and for everyone, and I do not see any substantive issues that divide us and ETYK, or the other trade unions, with which we have a sincere cooperation," he added.

Asked when the staff would be called on to decide on the early retirement scheme, Hadjiyiannis said "we hope to activate the programme on Monday," adding that "we wish to give the opportunity to the staff to begin to evaluate this proposal."

"The aim is to begin procedures regarding the scheme on Monday," he said, adding that "it is a wise plan that ensures the day after for those who will opt to leave."

Hadjiyiannis told CNA that "the restructuring plan was a huge challenge and it has begun to be implemented," adding that "this gives us enough certainty that with all our might we will be able to meet the goal that is the stabilisation and recovery of the Cooperative."

He said that with the implementation of the plan "we are securing our clients," adding that "we should directly look after our borrowers, who are either vulnerable groups or are facing financial problems, and stand by them with a specific policy."

"The real challenges and problems are there, not in our balance, but in the society and the economy," he concluded.