A change in the banks’ employee remuneration policy is unavoidable and banks need to engage with the unions on this issue, Bank of Cyprus’ Chief Executive Officer Panicos Nicolaou has said.
“The banks will not to move fast in engaging with the unions to promote a fair” remuneration system based on productivity and job description, Nicolaou said, noting that this may not happen this year or the next “but it will come soon as this is inevitable and it will come.”
Nicolaou highlighted the main challenges facing the banks in the euro area, namely, low interest margins, cost-to-income-ratio, legacy issues, such as non-performing loans, regulation and the digital disruption.
“Having lower income banks need to improve cost efficiency,” Nicolaou said, adding solutions could come from more traditional cost-saving actions such branch network downsizing as well from adopting cost-efficient technology.
He also said that banks in Cyprus and in Southern Europe are facing headwinds from NPLs which absorb a lot of operation capacity, tie up capital and involve high administration costs, while regulators press for higher capital requirements and for solutions in legacy problems in “within accelerated timeframes.”
“There is no grace period for solving our legacy problems,” he added.
Head of Financial Advisory Services of Deloitte Cyprus Nicos Kyriakides referred to the new challenges that are affecting the international business environment.
Among them, the ever-increasing globalization and the challenge of digitalization in business. He also said that geopolitical risks, social instability and climate change are affecting the agenda of business leaders.
He also said that the shift to greater use of natural gas than oil, the growing penetration of Renewable Energy Sources and the storage of energy from renewables challenges, lead to changes in the international energy market.
He also referred to the increased demand in advisory services and more preventing consulting and stressed the need for more participation of women in business leadership.