Hellenic Bank will submit a restructuring plan to the labour ministry that will include up to 350 compulsory redundancies this year, its CEO Oliver Gatzke said on Thursday, a move likely to set it on a collision course with employees’ union Etyk.

Speaking at a press conference to announce the bank’s 2021 results, Gatzke said that the bank has also put other benefits on the table for discussion, including the automatic indexation of wages, employer’s contribution to Etyk’s health fund and pay rises. Salaries cannot rise at a rate of 5 per cent a year given that the bank has not paid out a dividend since 2013, he said.

And he criticised Etyk for not coming to the table to discuss these issues.

“We have started a mediation procedure with the labour ministry to draw up a new collective agreement, and at the same time are focusing on the drafting of a restructuring plan this year and will notify the ministry and the union in the next two weeks,” he said.

“The plan for this year is basically to reduce the number of personnel by between 300 and 350 people, and we are planning to do this with redundancies,” he said.

Staff numbers throughout the banking system are very high, at a time when banks are closing branches and investing large amounts in digital transformation, he said.

Banking is changing, and Cyprus is five years behind the rest of Europe in terms of banking services, he added.

At issue is not just a small voluntary early retirement scheme for 100 people, because the cost to income ratio is very high, and rising by the year. As a hypothetical example, he said 1,000 staff members choosing to leave for a scheme of €150,000 per person would cost €150m.

He also raised the issue of the 3.5 per cent annual contribution the bank pays to the Etyk health fund, despite Gesy, the general health system. On the cost-of-living allowance (Cola), he noted that if inflation rises to 6 per cent this year and Cola is paid at 50 per cent of that – that is 3 per cent, then total salary increases will be 7.5 per cent.

And he linked the issue of the number of personnel with the drawing up of what he termed a balanced collective agreement.

“If we can find a solution for a more balanced collective agreement, this will affect the number of people we can employ in the future.”

Hellenic has not paid a dividend since 2013, while salaries have risen by 5 per cent a year, he said. “I have no problem paying high salaries, but we must become more productive so that we can pay dividends and better salaries.”

The union is refusing to engage in talks, opting instead to threaten legal action, even though the bank has said it will comply with its legal obligations, the CEO said.

“Why do they threaten? Is this a negotiating tactic, do they want to get rid of me? The issue is elsewhere. There is a systemic problem that must be dealt with,” he said adding that the board and shareholders fully back this strategy.

“I hope our partner, the union will recognise this and at some point will come to the negotiating table.”

Gatzke also announced that the bank will start charging negative interest on individuals’ deposits in excess of €100,000 from the beginning of June. Affected clients – who account for between 5 per cent and 10 per cent of the bank’s deposit base — will be informed. They have the option to convert their deposits to fixed notice accounts of year or to opt for investment products offered by the bank in cooperation with Allianz.