By George Psyllides
THE INTERIM chairman of stricken Bank of Cyprus (BoC) said on Wednesday that a voluntary retirement scheme announced on Tuesday and rejected by bank employees’ union (ETYK) was much better than any scheme that may come in the near future.
ETYK said the plan was inadequate and doomed to fail.
Sophocles Michaelides said lengthy discussion with ETYK did not lead anywhere.
“We delayed taking the decision as much as we could,” Michaelides said. “Eventually, we saw there were certain points that were very difficult to bridge.”
Michaelides said one of those issues was the provident funds. ETYK wanted those leaving the bank to have their provident funds secured.
BoC could not guarantee this, Michaelides said.
The scheme provides that those who opt out would receive a month’s salary for every two years of service, plus five monthly salaries.
Compensation would be up to €150,000 for each person leaving, the bank said, and employees would keep their medical and life insurance coverage until the end of 2014.
“I have to stress that the plan is very attractive. And for some employees it would be much better to decide (to leave) with today’s scheme than wait three months for the next plan that will be the redundancy plan,” Michaelides said.
The plan would be valid from July 8 to 26, with eligible staffers departing on July 31.
Reports suggested that those leaving now would receive 30 per cent more cash than when the bank starts making people redundant.
ETYK branded the plan “arbitrary” after its attempts to get a better compensation package failed.
The union discussed the matter yesterday and decided to seek meetings with President Nicos Anastasiades, Finance Minister Harris Georgiades and Central Bank Governor Panicos Demetriades to discuss the dispute over provident funds.
Following a board meeting, ETYK released a strongly-worded statement warning that it would not remain indifferent should commitments on securing the provident funds not be met.
“If our meetings in the coming days do not go as expected, based on commitments received by the government and parliament on securing the provident funds, then everyone should be aware that ETYK will not sit quiet.”
The union went on to say that the self-restraint shown so far should not be misinterpreted as weakness.
ETYK argued that the chances of success of the scheme were limited, adding that Michaelides’ statements were “a clear attempt to exert psychological pressure” on bank employees, which would not be accepted.
The union alleged that there remained a lack of clarity over how much an employee opting for the voluntary retirement scheme would get from their provident fund.
BoC, owned by its biggest clients after their uninsured deposits were seized and converted to equity to help its recapitalisation, said the scheme would be open to all staff, including those at subsidiaries.
Its staff numbers swelled to about 5,600 after it took on 2,400 from now-defunct Laiki Bank, the island’s second- largest lender which was forced to wind down after being hit by exposure to Greek debt.
Under terms of an international aid package, depositors in BoC saw their accounts raided and converted into equity to recapitalise the lender, in a process known as a bail-in. The state also received €10 billion in aid from the EU and the International Monetary Fund.
Provident funds were not exempted, although the government said it would try to reduce the losses.
The government has said it will try to limit the losses of provident fund members to around 25 per cent of the amount they would have received before the haircut.
Georgiades said that an amount will be given from the bailout to compensate provident funds with deposits in Laiki.
The aim is to keep their losses at the same level as those deposited in BoC.
