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Banks decide no to close more branches

16/12/2004 10:37
The policy of the Cyprus banks to reduce the number of their branches on the island in an effort to restrain the operating cost has finally come to an end. Having already closed 1 of 6 branches, the commercial banks do not exclude the possibility of proceeding to a merger of the neighbouring branches if necessary.

It’s been more than a year now that the number of branches has been reduced. Specifically, the Bank of Cyprus has closed 2 in 2004, reducing its total branches on the island to 152 (excluding safe-deposits, seasonal tourist branches, corporate centers or IBU), while the Hellenic Bank closed 4 in 2003, converting some of them into safe-deposits. The total number of the Hellenic Bank branches is 73. On the other hand, the Popular Bank has completed the first round of shrinking, since it did not proceed to a closing in 2003. CPB has 100 branches.

Reduction of cost with no cost…

However, after the island’s accession in the EU the need to reduce the operating cost has lost its importance to some extent. According to a bank source, the need for a branch network that will not allow the arrival of new banks in the Cyprus market is a suspending factor for the further reduction of the branches.

Different policies…

The policy adopted by each bank was different. So was their policy in an effort to reduce the cost of rents, power or cleaning.

The expansion in Greece and the adoption of a different organizational system played an important role in this procedure, a Bank of Cyprus official said. “Decisions concerning the approval of high loans, for example, are not taken by the local branches but from the centralized services with fast procedures. The Management of the bank takes advantage of the experiences from each market and adopts a program for the comparison of advantages and disadvantages. The bank is also examining whether the merger of two neighbouring branches is feasible”, he continued.

It is noted that the number of the Bank of Cyprus branches that closed in 2004 was lower than that of the Popular Bank and the Hellenic Bank.

On the other hand, a Popular Bank high ranking official stated that although the Bank has completed the procedure of closings, the possibility of proceeding to the merger of two neighbouring branches to increase their effectiveness is still open. “In this case, the staff is transferred to one of the two branches”, he added.

The Hellenic Bank goes through a phase of ongoing rationalization of its branch network not only due to its need to restrain the operating cost but also due to the acquisition of Barclays eight years ago. “We had branches the one next to the other. With the mergers, the Bank has organized its branch network”, a Hellenic Bank official told StockWatch.