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More job cuts planned in banking sector

bank of cyprus headquarters banking standard and poors s and p

The Bank of Cyprus plans to reduce the number of its branches by 25 per cent and workforce by 15 per cent this year. In numbers, this means 500 jobs will go and branches would be reduced from 80 to 60.

In its report for the first quarter of 2022, in which it recorded after tax profits of €22 million, the bank said the management “remains focused on further improvement in efficiency, through for further branch footprint optimisation and further exit solutions to release full-time employees.”

During Thursday’s presentation of its results, the Bank of Cyprus said that aiming for a leaner operating model was a key part of its strategy in order to increase the value delivered to its shareholders in the medium term.

Regarding any costs stemming from any restructuring plans, the bank said that these will be essentially eliminated, citing the fact that balance sheet de-risking has been predominantly completed.

The bank also explained that in terms of further exit solutions to release full-time employees, one of the bank’s subsidiaries completed a small-scale targeted voluntary staff exit plan (VEP) during the first quarter of 2022. However, this only resulted in a small number of full-time employees being approved to leave at a total cost of €3 million.

There could be problems ahead for the banking sector as the two biggest banks have announced plans to lay off staff. Hellenic Bank is currently at loggerheads with the bank employees’ union Etyk over its plans to make 350 workers redundant this year.

On Wednesday 99 per cent of Etyk’s members voted in favour of a strike at all banks if Hellenic went ahead with its plans to make staff redundant. The union wants the bank to adopt the practice that has always been followed – having a voluntary exit plan which involves a generous pay-off that for some workers could be as much as €200,000.

Bank of Cyprus CEO Panicos Nicolaou was very diplomatic when the issue of redundancies was brought up on Thursday. He said the bank respects its staff and any decision will be discussed before its implementation. Asked whether there would be redundancies, he said that, until now, the bank had always reduced staff through VEP.

Both banks have decided to cut costs because the scope for revenue increases is limited. The Bank of Cyprus said that the cost to income ratio was estimated to increase during the current year due to the fact that “revenues remain under pressure and operating expenses increase due to higher IT and digitisation investment costs, before improving to 50-55 per cent by the 2025 fiscal year”.

According to the financial results, the Bank of Cyprus’ labour costs reached €50 million in the first quarter of 2022, remaining stable from both the previous quarter, as well as the corresponding quarter in 2021.

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