Hellenic Bank to make 350 staff redundant

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Hellenic Bank, Cyprus’ second-largest commercial bank, is reducing its staff by some 300-350 people to bring down operating costs.

According to news site Stockwatch, Hellenic’s CEO Oliver Gatzke has sent letters to labour unions PEO, SEK, and the Union of Bank Employees ETYK informing them of the bank’s intentions to let around 350 staff go.

The bank informed unions it is determined to go ahead with its new business plan to reduce operating costs, calling them to the negotiation table under the Labour Relations Code.

According to Stockwatch, HB’s CEO warned the redundancy process was inevitable unless a collective agreement considered the bank’s revenue, expense ratio and the percentage of wage claims.

Gatzke argued the bank should gradually get rid of “outdated”, as he characterised it, the practice of horizontal promotion and compensation schemes.

He ruled out the possibility of handing out compensations of around €200,000 to each employee who decides to press the exit button, as was the practice in previous voluntary exit plans.

Gatzke had announced redundancy plans in the bank’s annual report for 2021.

According to the report, Hellenic Bank is now turning its attention to the transformation plan, highlighting the reduction of the high cost/return ratio as key.

“We are focusing our efforts on both increasing interest income through new lending and generation of miscellaneous income, as well as containing all administrative expenses,” Gatzke noted in the report.

“And the plan for this year is basically to reduce the number of staff between 300 and 350 people, and we plan to do it through redundancies.”

Last year, the bank recorded losses of €11.7 mln, mainly related to the forecasts of the Starlight project, with which HB will be offloading €1.3 bln in toxic loans.

Hellenic agreed to sell its last Non-Performing Loans after sealing an agreement to sell a package of NPLs worth over a billion euros and its debt servicing platform APS to Oxalis Holding SARL, an entity managed by Pacific Investment Management Company LLC (PIMCO).

The bank made significant progress in reducing the risks to its balance sheet and is now within touching distance of its medium-term target to reduce non-performing loans (NPLs) to 3% of its loan portfolio.

Trade union officials told Stockwatch that Gatzke’s letter would be reviewed, and a reply letter would be sent.

ETYK urged Hellenic Bank staff to go on the offensive in response to mass redundancy plans, which it deemed the “easy solution”.