Shifting to an increasingly automated environment, reduced red tape, and simplified processes created opportunities for cutting labour cost, an issue that the Bank of Cyprus will be looking into as part of preparing next year’s budget, a senior executive has said.
In a letter to staff, deputy CEO and chief operating officer Christakis Patsalides, reiterated that the lender’s priority was to reduce its bad debts further, still above 30 per cent against a eurozone average of 3 per cent.
Patsalides said the bank remained focused on continuing to improve its asset quality and finding ways to rid its balance sheet of a significant burden.
It was, however, also seeking to find a business model that secures the success of the bank on a long-term basis.
The COO said banks across the globe were seeing reduced revenues mainly because of low-interest rates, but also high operating costs affected by a strict regulatory and supervisory environment at a time when competition from high-tech non-financial institutions reduced revenues in a broad range of activities.
“The trend of reduced income and rising expenses is expected to continue,” he said. “We want to be successful. We need to boost our competitiveness. We need to reign in our expenses and bolster productivity,” Patsalides said in the letter.
Bank of Cyprus shuttered 15 branches this year as it restructured its network amid a drop in over-the-counter business as more and more people do their business through digital channels.
Some 75 per cent of the bank’s transactions are carried out through digital channels and the rate is even higher among private citizens, 83 per cent.
Nine in 10 withdrawals are done at ATMs and loan applications through the lender’s site are seeing a daily rise.
Ninety-two per cent of money transfers is also done online.
“It is natural that automation, the sale of loans, simplification of procedures, reduction of bureaucracy, and modern work methods, will create opportunities to cut labour cost,” Patsalides said. “This is something that we are particularly looking into at present and will be assessed as part of the budget preparation for 2020.”
Cost cutting will also include the disposal of consultants in combination with rationalising the loan portfolio, the sales of real estate in the lender’s hands, and other actions.
“We expect the cost in question will be markedly reduced in 2020.”
A team of executives has also been set up to examine other cost-cutting actions, not related with staff, Patsalides said, adding that their intention was to include the entire personnel in this effort.