Cyprus Mail
Cyprus

Depositors baulk at bank employees redundancy demands

By George Psyllides

STUNG bank depositors warned on Friday they would not accept soon-to-be redundant bank employees receiving any money – as severance payment – over and above what they were entitled to under the terms of the bailout.

People who saw their uninsured deposits – over €100,000 – whacked, as part of the island’s bailout, pledged to react if retiring bank employees received the full, pre-bailout amount of their provident funds, when these have also been subject to a haircut.

“If any bank has money to pay so-called gratuitous compensation then why don’t they have money to pay depositors,” said Adonis Papaconstantinou, chairman of SYKALA, the association of Laiki Bank depositors.

As part of its bailout, Cyprus had to close Laiki and recapitalise Bank of Cyprus (BoC) by raiding people’s deposits.

Provident funds were not exempted, although the government said it would try to reduce the losses.

Certain Laiki assets, along with its employees, have been absorbed by BoC, which must now shed around 2,000 jobs.

The bank is currently engaged in discussions with ETYK, the employee union, to come up with an early retirement plan.

The union, among other things, is asking that employees be paid their full provident fund, irrespective of the so-called haircut.

“Our dispute is not with bank employees. What we are trying to ensure is for things that happened in the past not to happen again. In this country, we all want to be generous with other people’s money,” Papantoniou said.

The association has written a letter to the Central Bank governor informing him of their objections.

The government has said it will try to limit the losses of provident fund members to around 25 per cent of the amount they would have received before the haircut.

Finance Minister Harris Georgiades said that an amount will be given from the bailout to compensate provident funds with deposits in Laiki.

The aim is to keep their losses on the same level with those deposited in BoC.

Uninsured deposits in BoC have so far been written-down by 37.5 per cent but the rate could ultimately reach 60 per cent.

Depositors will receive equity in exchange for their loss.

 

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