12° Nicosia,
02 June, 2023

Tying up loose ends at Hellenic

Changes in top management, staff, shareholding composition, collective agreement, and

Panayiotis Rougalas

Hellenic Bank experienced several changes in 2022, as it closed outstanding issues while also opening new chapters. Hellenic Bank made changes to its top management, staff, shareholding composition, and labor issues in the fourth quarter of 2022, but also made decisions that will affect the organization's future course. Apart from the events of the past, it now has three outstanding issues to deal with: the situation that has arisen with its CEO, German Oliver Gatzke, the negotiation of a new collective agreement with the unions, and the balances with Eurobank's new admission as a major shareholder in the bank.

Regarding the third and most recent development, the Cyprus Securities and Exchange Commission determined that there was insufficient evidence to continue looking into Mr. Gatzke's case and his alleged attempts to manipulate the share price of Hellenic. The Securities and Exchange Commission has informed Hellenic Bank that there is nothing more to look into regarding the claims that Mr. Gatzke encouraged Hellenic staff to invest in the bank by purchasing shares, as "K" is in a position to know. Hellenic must now decide how to handle the situation and whether to keep working with the German banker.  For so long, the German banker's position has been "more than covered," as during the brief tenure of Mr. Petros Arsalidis, the bank's acting CEO, a Voluntary Exit Plan was successfully implemented, discussions with unions to renew the collective bargaining agreement continued, and decisions regarding the interest on convertible capital bonds, also known as CDOs, were finally made. We will see in the near future whether the bank wants to continue working with the German banker or terminate him and find another CEO. However, when it comes to accusations of share manipulation, Oliver Gatzke is "clean" according to the Cyprus Securities and Exchange Commission.

The contract is about to expire

The second open issue that will be addressed in the coming period is the renewal of the collective bargaining agreement. Mr Phoebus Stasopoulos, the other acting CEO before the German, was one breath away from signing the collective agreement with the unions. However, the bridge that had been built collapsed at some point, and the talks between the two sides had to be rebuilt from the ground up. K is aware that the collective agreement between Hellenic and the unions is about to be renewed.  It is unclear whether it is again just a breath away from being signed, but it is well on its way. Since the summer and into the fourth quarter of this year, a lot of ground has been covered. Furthermore, the Voluntary Exit Plan was one aspect of the collective agreement renewal. The reduction in employees would not have occurred if it had not been on track.

Eurobank's advocate

One issue that has occurred in the process of Eurobank's further penetration into the Hellenic Bank that should be addressed is Eurobank's desire to "have a voice" in the Council. When it owned 12.6% of Hellenic Bank for more than a year, it had no representation on the Organization's Board of Directors. As K wrote again, now that Eurobank is only 4% away from gaining full control of the bank, the ferment should begin to get at least one representative on the Board. The 26% it has after Wargaming bought 13.4% of the shares has turned it into Hellenic's major shareholder, and it is bound to "dethrone" shareholders who have more than one representation sooner or later.  Such changes will be visible in the near future.

Salary reinstatement

In response to persistent and harsh criticism from ETYK, Hellenic Bank reinstated the salaries of the former Co-operative employees that had been cut as of 1.1.2014 at the end of October. The adjusted salary was paid to 'Affected Employees' at the end of October, and any retroactive amounts owed from 01/01/2019 to 30/09/2022 are expected to be paid by the end of 2022.

The Voluntary Retirement Scheme

Following the restoration of the salaries of former Co-operative employees, a Voluntary Exit Scheme was completed. The goal was to lower the Bank's high cost-to-income ratio (74%), and 450 employees (roughly 17% of the Group's employees) were approved for separation. This relocation will cost approximately EUR 70 million.

MAK Payments

Hellenic Bank also announced on November 29, 2022, its decision to begin interest payments on the Convertible Capital Securities MAK 1 and MAK 2 from 1 October 2022 to 31 December 2022, with the first interest payment due on December 31, 2022. This is a "landmark" decision for the Bank and the investing public, as it was anticipated by investors who have held these bonds since 2013. It is possible that the Bank should have gone ahead with such a decision anyway, as the Bank has stated that as part of its Strategic Plan review, it will evaluate its decision on the dividend payment for its ordinary shares, subject to regulatory approval.

New three-year plan

Hellenic is in the middle of adopting its Strategic Plan by the end of 2022.  It will set medium-term financial targets. It is a process that is primarily based on inflation, interest rates, and newly created data that are not exactly in line with the Group's previous three-year plan. 

[This article was originally published in Kathimerini's 'Oikonomiki' and translated from its Greek original]

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