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Banks seek to reduce staff

01/03/2016 13:52
Banks in Cyprus are seeking to reduce their number of employees, after reporting significant losses for 2015.

After the Hellenic Bank and the Bank of Cyprus, now Alpha Bank has introduced a voluntary retirement plan for its employees.

Alpha Bank offers larger compensation to its employees than the other banks, and the rest of the banking sector will be monitoring the success of the plan with great interest.

Alpha Bank aims to reduce its staff by 20% from 870 people it employs today.

The Hellenic Bank announced a similar plan in late 2015 and BOCY introduced a retirement plan a few weeks ago. Both banks failed to attract the level of interest they aimed for, with only a few dozen employees taking the voluntary plans.

After its voluntary retirement plan failed, the Bank of Cyprus examines various scenarios for the reduction of its payroll, including redundancies.

In Alpha Bank’s plan, compensation depends both on years of service and age. The Bank offers a higher rate of compensation as a percentage of the salary, to employees between 36 and 45 years old.

ETYK, the union of bank employees, in a circular issued yesterday regarding the failure of BOCY’s plan, indicated that the plan of Alpha Bank is more attractive, offering in some cases double the compensation.

Alpha Bank’s plan provides an annual gross salary each year of service, multiplied by a rate depending on the employee’s age.

Rates were determined as follows:

Under 30 years old: 8% adjustment to number of annual salaries
31-35 years old: 10%
36-45 years old: 23%
46-50 years old: 18%
51-55 years old: 17%
56-64 years old: 10%

A senior official of Alpha Bank told StockWatch that if an employee participates in the plan and receives an annual gross salary of €45 thousand, has 15 years of service and his age is 42 years old, then his compensation will be €45 thousand by 15 years of service by 23% which is the adjustment rate.

This employee will receive around €155 thousand in compensation.

An amount of €150 thousand will be tax free. Tax will apply only on the rest of the amount based on existing rates.

The bank has set the highest amount of compensation to €170 thousand.

For employees in Limassol, Larnaca and Pafos there is an additional adjustment rate of 5%. The reason for this is that the Bank wishes to centralize its services in Nicosia.

The plan also provides for two consecutive years of healthcare and for two years of group life insurance.

It also provides that loan pricing for employees who will retire with the voluntary plan will be the same as for existing employees and based on any variations in interest rates, without a time limit.

Bank employees get subsidized loans.

The plan came to force yesterday and will last until March 24.

Alpha reported losses of €45 mln. for 2015.

The Bank of Cyprus offered half a monthly salary or a monthly salary (instead of annual salary), without the age adjustment. It also offered four monthly salaries. The maximum amount of compensation was €200 thousand.

Although the bank hoped for the retirement of 200-400 employees, information suggests that only a few tens of employees opted for the plan.

BOCY reported losses of €438 mln for FY 2015.