Hellenic Bank and the Co-operative Central Bank may need to rethink the government-sponsored staff restructuring plan as the number of people who have opted for the voluntary retirement scheme (VRS) could exceed 1,000, higher than the initially planned 900, with less transferring to Hellenic than first planned.
It would seem that the incentive of a ‘golden handshake’ of nearly €180,000, higher than the initially planned €140,000 may have triggered the increase, as the staff will be eligible for 6 month’s unemployment and a further windfall from the Social Insurance Fund, in about 12 months from the day they quit their jobs.
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So far, 963 CCB employees had pressed the exit button on their personal portal until Friday afternoon, when the scheme was to end. However, it has been extended to Tuesday upon the request of employees and unions as many were still on annual leave or on holiday out of the country.
Hellenic’s CEO Ioannis Matsis is expected to brief the bank’s shareholders on the issue during an extraordinary general meeting (EGM) in Nicosia on Wednesday.
The initial plan, that would have placed the Co-op’s 2660 staff in three different categories – 900 in voluntary retirement, 1,100 absorbed by Hellenic and 800 headed to the NPL management company – as part of Hellenic Bank’s acquisition of the CCB’s ‘good portfolio’ assets, was expected to be fully underwritten by the government, the ultimate owner of the Co-op bank after several failed rescue attempts.
As things stand today, fewer employees are expected to be absorbed by Hellenic Bank and the CCB’s NPL management body.
It has yet to be clarified whether the agreement between CCB and HB in relation to management and staff costs is to be modified.
During the negotiations, Hellenic’s management had demanded from the state that in case the scheme fell through and it would have to take on more employees, it would be compensated for that cost.
It has not been clarified whether HB is to return the equivalent to the state if at the end of the day the number of employees it absorbs from the Co-op is less than the 1,100 agreed.
In comments made to news site StockWatch, Elissaios Michael, General Secretary of SEK, a union representing some of CCB’s employees, said that it is estimated that 80% of employees who have opted to retire will receive compensations close to €180,000. Initial estimations had set the average compensation at €140,000.
As Michael explained, the bulk of employees opting for the VRS are aged over 50 and occupy the high end of the salary scale.
CCB’s administration is not yet able to disclose whether the initially estimated cost of €128 mln will be adjusted as more than 1,000 are expected to opt for the retirement scheme.
Meanwhile, the employers’ federation OEV, saying it was satisfied with the conclusion of the VRS, that had earlier been a stumbling block in HB stepping in to rescue part of the Co-op, warned that the payout was too high and unsustainable, and that “the amounts [for the VRS] are multifold of any past practices of a similar nature and exceed any comparison based on wage levels or actual numbers.
“The revival of the economy and the high growth rates were achieved after the enormous sacrifices of enterprises and their employees, in combination with [the state’s] prudent fiscal policy.
“We must maintain this policy, as the risks have not dissipated and the crisis is not all over yet,” OEV concluded.
