Cyprus Mail

As Co-op, Hellenic talks near conclusion, unions step in (Updated)

By Stelios Orphanides

Talks between Hellenic Bank and the Cyprus Cooperative Bank for the acquisition of the latter’s operations have made progress, and as a sign that negotiations are about to be concluded, the government agreed to talk to unions representing affected workers, sources said.

Representative of the unions SEK, PEO and Pasydy, representing the bulk of the 2,650 Co-op workers are scheduled to meet President Nicos Anastasiades on Thursday to receive assurances about the future employment status of those who will continue working for Hellenic, or the unhealthy part of the Co-op that will manage its non-performing loans portfolio and will be converted into a bad bank, representatives of two unions said. A first meeting, scheduled for Monday, was cancelled.

“The meeting with the unions will take place only if the deal is concluded,” government spokesman Prodromos Prodromou said according to a transcript of his comments to reporters on Tuesday emailed by the Press and Information Office. “The general assurance that the government has given that the worker rights will be protected, is still in place”.

The union representatives that they also want to receive assurances from Anastasiades that the government will compensate about 1,000 Co-op workers, equal to the number of jobs the state-owned bank would have to otherwise cut as part of its restructuring plan, in an equally generous manner as Bank of Cyprus and Hellenic Bank compensated employees who benefited from recent voluntary retirement schemes, the union representatives added.

“We are nearing the end of the (takeover) procedure without having any official information and therefore we thought that we should seek a meeting with the President,” Savvas Toulloupos, head of the PEO branch representing workers in the services sector said in a telephone interview on Tuesday.

The unions had previously received “written assurances from the Cyprus Cooperative Bank and the finance ministry that the staff would be a foremost priority,” he said. “We have already taken our decisions. If we are not happy on Thursday, we will take massive and dynamic measures”.

His counterpart at SEK Elysseos Michael said that the unions will only consider a compensation plan as satisfactory if it is on a voluntary basis and takes into account a worker’s years of service, remaining years of service before retirement, age and earnings.

On top, just like in the cases of similar schemes offered by Hellenic and Bank of Cyprus, benefits must be exempted from tax, Michael said.

The Cyprus Business Mail understands that Hellenic intends to reduce, following the merger, the number of workers it will receive from the Co-op which is part of its commitment to regulators.

In the meantime, talks between Hellenic, one of the two bidders to acquire the Co-op’s healthy part, which includes the performing loan portfolio of around €5bn, government bonds in the possession of the Co-op with their value in excess of €4bn, and customer deposits of over €11bn, a source familiar with the matter said.

The government is currently in talks with Hellenic about ways to offset the funding gap between the value of the assets and deposits that Hellenic will assume, the source added.

While the takeover will increase the size of Hellenic’s balance sheet, by absorbing the Co-op’s performing loans, it will reduce the bank’s non-performing loans from over 52 per cent at the end of March to around one fifth of the total, the source said.

The Cyprus Business Mail understands that the other competing bid submitted by Apollo Capital Management is less likely to succeed.

While government spokesman Prodromou declined to comment on the actual negotiations, he said that that they aim at protecting “people’s deposits at the Cyprus Cooperative Bank and to safeguard financial stability and the economy’s prospects”.



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