The discussion between Hellenic Bank and the Cyprus Union of Bank Employees (Etyk) have broken down, resulting in the bank now seeking mediation from the Department of Labour Relations.
“It is unfortunate, to say the least, that the Union submitted for discussion several unrealistic demands, proving that it fails to comprehend the real situation and challenges being faced by the Bank,” Hellenic Bank CEO Oliver Gatzke said in an internal memo sent to bank staff on Wednesday.
“This weakens the efficiency of negotiations and together with the unconstructive and inflexible stance and not upkeeping to a tight timeframe, has led to a deadlock, leaving us in essence without any other option but to seek mediation from the DoL, as per the provisions of the Industrial Relations Code,” Gatzke added.
Hellenic Bank met with the union on January 28, under the auspices of the Department of Labour Relations, where the two parties agreed to enter direct negotiations in order to define a new collective agreement within the span of six weeks.
On its part, the Department of Labour Relations encouraged the two parties to find an amicable solution to all ongoing disputes.
Following the initial meeting, the bank then entered into direct talks with Etyk, outlining a number of challenges it now faces, including the need to reduce its cost-to-income ratio in pursuit of long-term sustainability, with the bank expecting to report slight losses for the financial year ending December 31, 2021.
In addition, the current international crisis will have negative ramifications on the bank’s prospects, as a number of sectors, such as hospitality, international business and construction, will be negatively impacted, further denting the banking sector’s profitability.
“We are focusing our efforts on both increasing [our] income through new lending and generation of miscellaneous income as well as reducing all administrative expenses,” Gatzke said, adding that “one of the most effective ways to reduce our cost-to-income ratio is the overall reduction of the payroll cost, targeting mainly the re-negotiation of several provisions of the collective agreement, as already submitted to the Union”.
The bank said that it aims to reduce costs in a number of ways, including the scrapping of the employer’s contributions in the medical and welfare funds, the gradual reduction of the contribution to the provident fund, as well as the amendment to the practice of horizontal and automatic salary increases to a performance-based system.
Regarding the new performance-based system, the bank said that it will enable it to close the remuneration gap between former Cyprus Cooperative Bank employees and former Hellenic Bank employees as it strives towards achieving uniformity in employment terms among its staff.
The Hellenic Bank CEO explained that there are three key aspects that contribute to the bank’s labour costs, with any savings achieved in each one having the potential to affect the bank’s restructuring plans.
These include salaries, benefits and contributions; the number of employees; as well as the size and compensation level of any employee exit schemes.
“Given the challenges and limitations, we are doing our best, always in good faith, to agree on a mutually beneficial collective agreement, to maintain the Bank on a solid and sustainable path,” Gatzke said.
“We must all rise to the occasion and understand that we do need to make sacrifices in order to avoid more drastic restructuring measures in the near future,” he concluded.