12° Nicosia,
14 June, 2024
Home  /  News

Banking sector to cut 600 more employees

Banks in Cyprus now employ 7,500 people, down from 12,500 in 2013

Panayiotis Rougalas

Panayiotis Rougalas

The number of employees in the Cypriot banking sector will have been reduced further by the end of 2022. By the end of this year, 600 bank employees will have left the company, while about 50 will have been transferred to a similar but non-banking sector. Alpha Bank Cyprus is already "running" a Voluntary Exit Plan from Monday 11 October to show the exit door to 80 people with a Plan that has many benefits, while about 50 people will be transferred to Altamira Asset Management, the company expected to service the loans purchased by Cerberus Capital Management from Alpha Bank.  At the same time, Hellenic Bank's decision to reduce its workforce, which has been discussed for months, is eagerly anticipated.  

The "menu" also calls for a 500-person employee reduction at the bank as part of negotiations for a new collective bargaining agreement with the Cyprus Bank Employees Union (CBA). Before deciding to step down, Hellenic Bank CEO Oliver Gatske stated at the bank's 48th annual general meeting that steps were being taken to develop a voluntary exit plan in order to cut the number of employees by about 500. Now, those rumors have been confirmed as fact. It should be noted that the Plan will have a direct impact on the negotiations the Bank is currently having with the unions to sign a collective bargaining agreement.  

For years, there have been discussions about taxing the amounts received by those who leave banks through Voluntary Exit Plans, but this has not come to fruition.

The Hellenic Bank's staff was reduced by more than 220 people in 2021 and 2022, primarily due to the non-renewal of temporary employees' contracts and not through Voluntary Exit Plans. As Gatske stated during his speech, Hellenic is operating with 25% fewer branches than in 2020, with plans to close another 9 branches by the end of 2022. Alpha Bank Cyprus will also close its branches. Specifically, among the approximately 80 people expected to leave the bank, some will be from Alpha Bank Cyprus's five branches. The bank will close 5 branches out of a total of 17.  In addition to these employees, the arrears department—that is, non-performing loans—will also see a reduction in staff at Alpha Bank Cyprus. After selling its non-performing loans to Cerberus, Alpha Bank Cyprus now has less than EUR 80 million in gross book value of such loans and properties. As a result, they won't be employed.

While Hellenic Bank will reduce staff by about 19%, Alpha Bank will reduce staff by about 130 people, or about 25% of its total workforce.

Over 1,000 in a year

Around 550 workers left the Bank of Cyprus in 2022 as part of a voluntary exit plan. Thus, by 2022, 1,100 individuals will have left Cyprus' banking industry when combined with the plans of Hellenic Bank and Alpha Bank Cyprus. If we assume that the banking industry in Cyprus currently employs 7,500 people, we can safely say that the workforce will decrease by 13–15% by the year 2022. According to data from the Association of Cyprus Banks, Hellenic Bank employs 2,610 people, compared to 492 at Alpha Bank Cyprus. While Hellenic Bank will experience a reduction of about 19%, Alpha Bank will experience a reduction of about 130 employees or about 25% overall.  It should be noted that Bank of Cyprus has reduced its workforce by more than 1,300 people since 2019, as a result of generous - in terms of size - Severance Plans implemented in recent years.

They will be taxed in the future

We have been living in the era of tax-free Voluntary Exit Plans for many years.  The success of the Voluntary Exit Plans is based on the fact that they are not taxed, but this may change in the future. For years, there have been discussions about taxing the amounts received by those who leave banks through Voluntary Exit Plans, but this has not come to fruition. Something like this must be enacted through legislation in the House of Representatives.

The Tax Department has issued a verbal ultimatum to banks regarding tax-free severance payments. As K is aware, the Tax Department believes that the cycle of the state assisting banks in their recovery from the - admittedly - difficult period of 2013 and the banking crisis experienced by the Cypriot economy has ended. Bank employees were reduced from around 12,500 in 2013 to 7,500 and then to 7,000 "within a short time." So, just before the start of the year, the Department sent the message to the banks, and we can expect that any project prepared by the banks will be subject to taxation in the future. However, such a plan will almost certainly necessitate consultation with the unions and will not happen overnight. 

[This article was translated from its Greek original]

Cyprus  |  banks

News: Latest Articles

Photo from Cyprus Passion FB page

Stay cool or fry trying!

Meteorologists sound red alert as blistering heatwave brings record 45°C – relief in sight soon
 |  NEWS