The long road to Ithaca, to paraphrase the epic poem by Kavafis, has ended for the former Laiki Popular Bank with the 9-month journey of its integration into Bank of Cyprus completed this week.
The once dynamic powerhouse, that is now revealed as sprawling with corruption and fraud ever since Evaghoras Lanitis let go of his strong grip over the banking giant, diminished into a black hole because of nepotism in lending and faulty investments in toxic Greek government bonds that sent losses into the billions.
Despite attempts to revive the failing bank, it was eventually shut down as part of last year’s €10 bln bailout for Cyprus with the Bank of Cyprus straddled with Laiki’s €11.1 bln in emergency liquidity assistance (ELA).
The bank effectively ceased to operate on its own as of June last year and in September the ‘Ithaca’ migration plan was introduced to transfer all infrastructure and systems to Bank of Cyprus.
As part of the forced merger, Bank of Cyprus embarked on a restructuring and asset disposal programme that included slashing the combined staff numbers from 8,800 a year ago to 5,400 today and the joint branch network from 203 in May 2013 to 130 at present. The downsizing of the branch and office network alone is also expected to save the Bank of Cyprus some €5 mln a year in rental fees.
“The integration of the ex-Laiki business in Cyprus is on track and the IT migration is expected to be completed by early June,” CEO John Hourican stated during a press briefing two weeks ago.
The Ithaca programme got underway last Friday when all Laiki accounts were suspended to take advantage of the long-weekend and reopened on Tuesday morning on the same platform as all Bank of Cyprus accounts.
In all, 1,115,000 accounts migrated from ex-Laiki to Bank of Cyprus, of which 348,000 were common, and they are all served on the same terminals and ATMs, as opposed to seeking out specific “ex-Laiki only” signage in front of branches and on the online banking systems.
The total cost for the migration programme was €3 mln and 70 companies and suppliers were involved, in addition to the 200,000 man-hours inputed by bank staff fr the design and implementation of the migration process.
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