Arab Bank, the Amman-based banking colossus, is close to packing up and leaving Cyprus, after a two-decade presence on the island.
The decision, according to news reports, came after a deadlock in labour talks with union leaders over the terms for the layoff of 68 staff due to downsizing the local operations from 12 branches to four.
The bank’s Country Manager, Jack Beighton, informed Labour and Social Insurance Minister Christos Taliadoros that Arab Bank has initiated termination procedures and will sack all 176 staff, the daily Phileleftheros reported Thursday.
The bone of contention is the redundancy plan, with staff and the powerful union ETYK demanding 9 weeks’ pay for each year of service, that amounts to CYP 5 million, and the bank offering no more than half that amount.
In his final act before leaving Arab Bank to take up a managerial post at Bank of Cyprus in his home Australia, Leighton suggested in a not-too-clear letter to the Labour Minister that the Jordanian-owned bank is leaving Cyprus, the daily Politis reported.
In a parallel notification to the Central Bank, though, Leighton leaves open the prospect for the decision to be overturned, the newspaper reported.
Central Bank Governor Christodoulos Christodoulou is reportedly going to make a last-ditch effort to mediate and save the day with discussions expected to begin with Arab Bank’s new manager who started work Thursday.
Other reports suggest that Beighton’s letter to the island’s regulatory authorities are simply based on a proposal to Arab Bank’s board in Amman to close the Cyprus operations, that have been considered as unprofitable for some time.
Beighton further reportedly suggests that the union’s demands are exorbitant and do not match the redundancies given recently to laid off workers at Cyprus Airways, KEO and Reuters.
“Our head office in Jordan instructed us to terminate all efforts to restructure the bank and its operations in Cyprus,” the letter reportedly said.
Employers have suggested that this outcome is also as a result of the rigidity of trade unions in Cyprus and the unwillingness of the Labour Ministry’s bureaucratic mediation service to be fair, expressing concern that other banks are also contemplating their investments in Cyprus, such as HSBC, that already holds a 20% in Laiki Bank, and Emporiki Bank of Greece, that is the subject of a takeover bid by individual investors.
