Cyprus banks brace for strike action

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Cyprus banks are worried over growing tension between Hellenic Bank and its employees as the sector heads for strikes following HB’s decision to make 350 staff redundant.

Hellenic, Cyprus’ second-largest commercial bank, officially informed unions of their intentions to reduce their staff by 300-350 to slash operating costs earlier this month.

The bank is determined to go ahead with its new business plan, letting staff go without compensation.

Unlike previous voluntary exit schemes rolled out by Hellenic and its main rival Bank of Cyprus.

In response, employees backed their union, ETYK, call for a general strike following regional general assemblies, delivering a 99.5% majority vote.

The Association of Cyprus Banks held a lengthy meeting last week to go over the situation to avoid industrial action in the sector.

According to media reports, officials, including HB’s CEO Oliver Gatzke, favoured finding solutions that would calm the waters while creating the base for a healthy dialogue with unions.

Bankers did emphasise that all banks are paying a high cost for labour.

However, the majority of the association members had some reservations over Hellenic’s choice to reduce staff through redundancies.

Bankers agreed that the provisions of the collective agreements should be improved with the contribution of the unions.

The association also reviewed the controversial issue of automatic horizontal pay increases granted without considering performance and productivity criteria.

Furthermore, banks argue they should not be obligated to offer private health plans and contribute to the country’s General Health System (GHS) at the same time.

Meanwhile, Bank of Cyprus CEO Panicos Nicolaou has urged Hellenic and ETYK to avoid a head-on collision.

Nicolaou said his bank’s structure would also change, reducing staff by 500 (15%) and closing some branches.

Bank of Cyprus has reduced its workforce only after compensating staff through an exit scheme.

The row between HB and its employees was ignited after Gatzke announced redundancy plans in the bank’s annual report for 2021.

He had 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Gatzke argued that the bank should gradually eliminate “outdated” horizontal promotion and compensation schemes.

He ruled out the possibility of compensation of around €200,000 to each employee who leaves, as was the practice in previous schemes.

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

Last year, the bank recorded losses of €11.7 mln but will be offloading €1.3 bln in toxic loans.