Pay cuts of up to 30% at Bank of Cyprus

Employees at the Bank of Cyprus are to see their wages cut gradually by up to 30%, according to an agreement reached Tuesday between the Board of Directors of the Bank and the trade union of banks` employees (ETYK).

According to a press release issued by the Bank, the Board and the trade union reached an agreement on Tuesday which includes reductions in salaries and allowances for all employees of the Bank of Cyprus, working in Cyprus.

They agreed on gradual wage cuts of up to 30%, as well as on cuts or reductions of up to 50% on benefits.

Negotiations continue as regards voluntary redundancy plans.

Excluded from international markets since April 2011, Cyprus applied for financial assistance from the EU bailout mechanism in June 2012, after its two largest banks sought state aid following massive write downs of Greek bond holdings amounting to €4.5 billion.

In March Cyprus and the Eurogroup agreed on a €10 billion bailout, on condition that Cyprus would secure 10.6 billion required for the recapitalization of its banking sector from own resources.

Under the agreement, Cyprus Popular Bank, Cyprus` second largest lender, would be wound down and its good part will be absorbed by Bank of Cyprus, the island`s largest lender, whose unsecured deposits (above €100,000) may take losses up to 60%.

Furthermore, Cyprus has undertaken to implement fiscal consolidation measures amounting to 7.1% of GDP, by 2016.

Amid the adverse financial conditions both in Greece and Cyprus, Cyprus` two largest banks resorted to ECB emergency liquidity amounting to €11.2 billion (€9.2 billion for CPB and €2 billion for Bank of Cyprus). This debt has been transferred to the consolidated Bank of Cyprus.