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Hellenic Bank, the island’s second largest lender after its two peers were merged and recapitalised as part of a Cyprus bailout package, is reducing its staff numbers by about 170 or 11% of its 1,576 workforce, with staff costs estimated to be 14% lower at the end of the year.
The Troika of international lenders argued that the island’s banking sector was too big relative to its GDP and forced second lender Laiki Popular to close down and merge with larger Bank of Cyprus, that was in turn rescued with a 8 bln euro bail-in by large unsecured depositors.
The consolidated Bank of Cyprus Group cut its workforce by 25% with 1,370 of its 5,760 workforce leaving last week, taking advantage of a generous voluntary redundancy package.
Hellenic Bank officials said that their ‘voluntary exit’ scheme was aimed primarily at its Cyprus staff and excluded staff from its former Greece branch network that was sold off to Piraeus Bank at a loss of EUR 42.6 mln as part of the ring-fencing of Cypriot banking operations there. The bank also plans to reduce is branch network from the current 64.
The bank did not disclose details of the ‘voluntary exit’ scheme but said simply that it was “based on the logic of compensation for remaining years of service.” Thus, staff cost is expected to come down from EUR 100.1 mln at the end of 2012 to about EUR 86.1 mln at the end of this year.
Bank of Cyprus offered one monthly wage for every two years’ of service, plus a bonus of 7 monthly wages in order to help reduce its staff cost and restructure.
From a Q1 2012 profit of EUR 8.06 mln, the Hellenic Bank Group reported a Q1 2013 loss of 31.7 mln. At end-2012 it had reported losses of EUR 21.93 mln, less than a quarter of the 99.55 mln losses in 2011.
At present, the bank operates 64 branches in Cyprus and one in Russia., it boasts a 12.2% market share in all Cyprus deposits, up from 11.7% at end-2012 and a 7.9% share of loans, up from 7.8% at end-2012. Total Group deposits stood at EUR 6.9 bln and loans at 4.02 bln, representing a healthy loans-to-deposit ratio of 59%. Currently, it is the only bank whos shares are trading on the Cyprus Stock Exchange. Laiki Popular has been delisted, while Bank of Cyprus will return, probably on October 2, to list with a bigger market cap than before, once its restructuring has been completed.
