Research Center
Cyprus Economy

230 take early retirement at Bank of Cyprus

01 February, 2013

Bank of Cyprus, the island’s biggest lender with a vast exposure to the troubled Greek market, said that 229 people took up an early retirement plan in January, helping to reduce operational costs by 8.5% on an annual basis.
This is part of CEO Yiannis Kypri’s restructuring plan that includes branch closures in Cyprus and Greece, as well as other staff and administrative cutbacks across its network.
The latest plan, offered only to long-serving staff earlier in the month, expired on January 31, with the beneficiaries taking their redundancy pay immediately and not showing up for work on Friday, February 1.
In Cyprus, staff numbers have now been reduced by 6.4%, while about 300 people left in Greece during January 2013, with an expected saving of about 12% on annual costs.
Although there was no similar programme in Russia, there was a staff reduction of about 200 people during 2012.
Bank of Cyprus is trying to find alternatives to reduce its overheads in order to avoid a significant bailout by the state, that would effectively part-nationalise it. It is also considering offloading all or part of its lucrative insurance subsidiaries, but not at the "cheap" price of 220 mln euros. 
The Cyprus Popular Bank Group (Laiki), the hardest hit of all local banks due to the writedown of its Greek government bonds and subsequent bailout by the government of Cyprus to the tune of 1.79 bln euros, said that although there was no early retirement plan in place, 133 staff had left the bank last year, which combined with wage cuts, helped reduce operating costs by 16%.
In Greece, Laiki Group subsidiary Marfin Egnatia Bank reduced staff by 400 last year, bringing down the payroll by 12%, and shrank its branch network from 174 to 132.
The bank said in early January that the cost-cutting measures that will continue in 2013 will help reduce operating expenses by a further 20% this year, adding that the group will focus on becoming a leaner operation, with a small branch network and more competitive services.
In announcing its 9-month results in early December, Laiki had said that “the successful implementation of the cost containment program continues to deliver significant benefits.” Total operating expenses were cut by 5% to 449 mln euros, from 472 mln in the nine months of 2011. The state-approved restructuring plan saw the closure of 16 branches in Greece and 11 in Cyprus, while staff numbers had also been going down as a result of early retirements and resignations in combination with the recruitment freeze.
No redundancy or early retirement programme was announced by Hellenic Bank, the only bank that turned the results around from a 73 mln euro loss in the three quarters of 2011 to an after-tax profit of 219,000 euros in January to September last year.
On a snail’s pace towards recovery, both domestic and non-resident banks deposits rose in December by EUR 215.8 mln to 70.2 bln euros according to figures released this week by the Central Bank of Cyprus.