By Yiannis Seitanides

Hellenic Bank will lay off more than 10 per cent (350) of its work force and shut down 20 branches by the end of the year, as part of a radical restructuring plan aimed at reducing its operating costs which is key to the viability of the bank.

In a letter to staff, CEO Oliver Gatzke said the redundancies would be part of a reorganisation plan that would be implemented over the next years “and has been deemed necessary for securing the long-term viability of the bank.”

Gatzke, had for some time warned that the bank’s high operating costs had to be reduced through redundancies and branch closures. With his letter he also included the proposed restructuring plan.

Hellenic Bank’s restructuring project is based on three initiatives that would lead to a bank with a stronger digital identity, a smaller number of branches, and a staff with diverse skills.

Although high costs needed to be tackled, the digital transformation would lead to a redesign of the business model, affecting the number of staff and the skills they needed to have. The strategy, developed with the assistance of external consultants, envisaged the attraction of new skills/talent.

In his letter, Gatzke defined the following initiatives as the basis of the reorganisation plan.

First, a move to digital/alternative channels of transacting, as part of its transformation strategy. The bank is moving towards digitization and/or adoption of alternative methods of executing banking transactions, which lead to simplification and modernization of a significant part of its operations. This would result in a substantial reduction in the volume and time of processing of the bank’s operations in most of its departments.

Second, it would introduce a modern loan management system (Retail Loan Origination Platform). The introduction and implementation of a modern loan management software will lead to the modernization and simplification of a significant part of its operations, resulting in a further reduction of the bank’s workload in most of its departments.

Third, given the above simplification of processes and modernization of the bank’s operations, which would lead to a significant reduction in the volume of work for its branch network, the bank the bank would be able to close branches all over Cyprus.

The increased use of electronic banking by customers which has led to the sharp decrease in the number of customers served at the branches, made this inevitable.

Regarding the branch network, the plan foresees the closure of 20 branches in 2022 while a significant shift towards the bank’s mobile app is already taking place. The number of users has exceeded 294,000 and 4,000 subscribers are added every month. In total, 82 per cent of banking transactions are now carried out through alternative channels.

At the end of January, teller transactions were down to 29 per cent, whereas a year earlier these stood at 51 per cent of total transactions. ATM usage increased to 71 per cent, up from 49 per cent a year earlier, explained Gatzke.

Meanwhile, bank employees’ union, Etyk, in a circular it sent out last Thursday, said it would not accept collective redundancies as a way of reducing staff numbers, calling for the practice of voluntary retirement that had been used in the past and involved the payment of generous compensation to employees.