The Bank of Cyprus has announced plans to downsize its staff, officially offering a Voluntary Retirement Plan to 500 – 600 employees from its 3,400 workforce to maintain profitability.
The news comes as the European Banking Authority (EBA) said Cypriot banks led EU member states in labour costs.
According to EBA data, the staff cost to equity ratio of Cypriot banks is 12% — the highest in the 27-member bloc.
Cyprus is followed by Romania (11.2%), France (11.1%), Italy (10.8%), Spain (10.7%), Hungary ( 10.6%), the Netherlands (10.4%) and Germany (10.1%).
The banking sector has repeatedly said it is under pressure.
As a result, it promotes business plans to cut operating costs, reduce staff and branches, and upload the bulk of its business onto the digital highway.
Bank of Cyprus announced the specifics of its voluntary retirement plan on Monday.
It said employees who opt for voluntary retirement might be compensated up to a maximum of €200,000, tax-free, depending on their length of service to the company.
The bank noted that if enough employees do not accept the plan, the bank may opt to make them redundant.
BoC’s goal, announced a few months ago, is to reduce staff by 15%, corresponding to approximately 500-600 people.
The bank told employees this would be the last voluntary exit scheme to be imposed, implying that any future layoffs would be carried out with redundancies.
Rivals Hellenic Bank’s recent attempt to make 350 employees redundant without compensation led to a pushback from its staff, which voted in favour of industrial action in May.
BoC officials said when presenting the bank’s results for the first quarter of 2022 that cutting costs will involve reducing branches by 25%.
Currently, the Bank of Cyprus employs 3,395 people, and staff costs amounted to €50 mln in Q1.
Meanwhile, the bank seeks to streamline its network, as most customers conduct their transactions online.
There was nearly a 40% decrease in the number of transactions at branches, as customers became familiar with alternative means.
In 2019, 724,000 transactions were conducted with the assistance of a teller; in 2021, it fell to 440,000 transactions, recording a decrease of 40%.
Data shows that 92.5% of payments and transfers in April were conducted through digital channels, such as the bank’s online payment app QuickPay.
Users of the bank’s mobile banking application and QuickPay have increased by 40% and 22.3% in the past 12 months, most probably sparked by COVID.
BoC is backing a new service created by credit card clearing houses for cash withdrawals, allowing consumers to withdraw money from tills at retail shops without visiting an ATM.