Bank of Cyprus on Friday unveiled its fourth voluntary retirement scheme since 2013 offering staff up to €200,000 tax-free with the aim of shedding 400 jobs.
The scheme came into effect Friday and will run until October 18.
In a message to staff, CEO Panicos Nicolaou highlighted the need for further cost cutting amid rising operating costs.
“We know the realities and we experience them daily,” Nicolaou said. “Ensuring our bank’s viability is of utmost importance. In light of the international financial environment in the banking sector, where interest rates are very low and operating expenses rise due to the strict regulatory and supervisory framework, there is a need for further rationalisation, further modernisation, and reduction of the bank’s operating cost.”
Faced with those challenges, the CEO said, the bank had to make significant changes to its operating model so that it remains competitive and ensure a successful course in the long term.
“At this critical point for the bank, the VRS will allow many colleagues to depart smoothly with a noteworthy benefits package,” he said.
The VRS is for all permanent staff of the lender and its subsidiaries with at least five years of continuous service who retire in 2020 and beyond. The bank reserves the right to accept or reject any application.
Staff who meet the criteria will be afforded compensation based on their years of service.
The maximum amount, which will be tax-free, cannot exceed 70 per cent of the remaining salaries until normal retirement, or €200,000.
Departing staff will also enjoy medical coverage for two years, which will also cover dependents who have already been registered to the health fund.
They will also have insurance coverage for two years in case of death as long as they do not find employment elsewhere within that time.
Staff who will opt to leave will also collect their provident fund.
In the last VRS, Bank of Cyprus shed 359 staff at a cost of €57m with the average payout being €159,000 per person.