Bank of Cyprus’ (BoC) latest voluntary exit scheme for its employees has reportedly been a flop
The deadline for BoC’s plan was Friday, with only a few dozen employees going for it. The lender’s intention had been to reduce staff by anywhere from 200 to 400.
It is the third such scheme launched by the island’s largest bank in a bid to trim its overheads. The first was rolled out in January 2013, resulting in the departure of around 230 people. During the second voluntary exit plan, in August of the same year, 1,370 employees took it.
According to a restructuring plan, as published by the bank in its Q3 2015 financial results, the aim was to bring the number of employees down to 4,100 by 2017.
The lender’s payroll at the end of the third quarter of last year stood at €176.59 million, compared to €176.40 million a year before.
BoC staff as of September 30, 2015 numbered 4,610.
The latest exit plan offered employees a maximum one-off payout of €200,000. Compensation was based on numbers of years served. Half a month’s salary was offered per year of service for the first 15 years, 0.75 salaries per year of service for the years 16 to 30, and 1.25 salaries per year served over and above 30 years. In addition, all takers were offered four monthly wages.
The powerful bank employees union ETYK meanwhile put forward a serious allegation, claiming attempts to coerce BoC employees into taking the plan.
The union and the bank have been at loggerheads over various issues.
“Certain known executives wishing to demonstrate to their bosses how ‘persuasive’ they can be, took to putting unbearable pressure on colleagues, to the point where this could be seen as bullying and blackmail,” ETYK said.
The union cited reports indicating that between the end of 2013 to 2017, another 150 employees needed to leave BoC, adding that this could have been achieved through expected retirements without the need for more drastic moves.
Meanwhile Alpha Bank this week rolled out its own exit scheme, designed to reduce personnel by 20 per cent. The lender currently employs 870 people.
The plan takes into account not only the years of service, but also an employee’s age. Persons in the 36 to 45 year age bracket were offered the highest weighting coefficient of 23 per cent, thus the biggest incentive.
As a bank source explained it to Stockwatch, an employee in that particular age bracket on an annual salary of €45,000 (basic salary plus wage indexation) and with 15 years of service, would get €45,000 multiplied by 15 multiplied by 0.23 (23 per cent), the weighting coefficient.
That worked out to €155,250. However if an employee’s remaining salaries until normal retirement came to €150,000, and the compensation was €170,000, then the first €150,000 would be granted tax-free.
Alpha Bank set a compensation cap of €170,000.
Rubbing it in, ETYK called Alpha Bank’s plan far more attractive than BoC’s.
The state-owned Central Cooperative Bank (CCB) is meantime proceeding with a voluntary exit scheme of its own. It reportedly aims to reduce staff by some 150 by autumn. The CCB currently has a workforce of about 2,700.
Also, under a restructuring plan, by mid-2017 the organisation is to slash the number of branches from 251 down to 200.
Both the reductions in staff and bank branches stem from the state’s obligations to the European Commission’s Directorate General for Competition.