Piraeus’ plans to expand Arab Bank in Cyprus

PIRAEUS Bank’s acquisition of Arab Bank has been made official, the new Cyprus operation will include nine new branches, the bank said yesterday.

The bank has already been granted a licence from the Central Bank for the provision of banking operations and will commence its activities immediately, with an initial capital of €50 million.

In addition to the current network of Arab Bank, Piraeus Bank (Cyprus) has scheduled the opening of nine more branches by March 2008. This will up the total number of branches to 13 island-wide. Staff numbers are expected to rise to 160.

Arab Bank had a network of four branches in Cyprus, and owned premises covering 4,600 square metres in the centre of Nicosia. The bank had a staff of 105 people and its portfolio included loans of €126 million and deposits of €246 million. The cost of the acquisition was €15 million.

“The objective of Piraeus Bank in Cyprus is to develop and establish itself as a powerful financial organisation in the greater geographical region, while providing quality services to the local market,” said Constantinos Loizides, Chairman and Managing Director of Piraeus Bank (Cyprus).

The deal means Arab Bank has effectively terminated its operations and has withdrawn from the Cyprus market.

Aram Bank began operating in Cyprus in 1984, but decided in 2005 to reduce the number of branches from 12 to four, and concentrate on business rather than retail banking.

Citing wage costs as 75 per cent of operational expenditure, the bank blamed cuts on high labour costs and the saturated retail sector, which made it difficult to compete with local banks.

The plan, which involved the redundancy of around 70 employees, caused a crisis when Arab Bank failed to reach agreement with bank employees’ union ETYK, which wanted a retirement deal instead of redundancy. This would have cost the bank an additional £2.5 million on top of the £2.5 million it was prepared to pay for redundancies.

They eventually reached a deal but Arab Bank decided to pull out. Piraeus Bank (Cyprus) Ltd. is a 100 per cent subsidiary of Piraeus Bank.
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The Cyprus Mail is the only English-language daily newspaper published in Cyprus. It was established in 1945 and today, with its popular and widely-read website, the Cyprus Mail is among the most trusted news sites in Cyprus. The newspaper is not affiliated with any political parties and has always striven to maintain its independence. Over the past 70-plus years, the Cyprus Mail, with a small dedicated team, has covered momentous events in Cyprus’ modern history, chronicling the last gasps of British colonial rule, Cyprus’ truncated independence, the coup and Turkish invasion, and the decades of negotiations to stitch the divided island back together, plus a myriad of scandals, murders, and human interests stories that capture the island and its -people. Observers describe it as politically conservative.