Piraeus Bank buys up Arab Bank in Cyprus

PIRAEUS Bank has bought the Arab Bank network in Cyprus for €15 million in a deal expected to go through early in the new year, the Greek bank said.

Arab Bank has four branches in Cyprus and its headquarters covers 4,600 square metres in the capital. The network employees 105 people, has loans of €126 million (£74 million) and deposits of €246 million (£144 million).

The deal means Arab Bank will effectively terminate its operations and withdraw from the Cyprus market.

The bank, operating in Cyprus since 1984, 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 the job 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., a 100 per cent subsidiary of Piraeus Bank of Greece, recently received a licence from the Central Bank of Cyprus to carry on banking operations from Cyprus.

Constantinos Loizides, the former head of Hellenic Bank, will be in charge of the new operation. Piraeus is expected to have 13 branches and 160 employees.

Loizides told Stockwatch that the 160 employees would include the 105 employees of Arab Bank. “Our aim is to develop our operations in Cyprus so as to become a base for the creation of a centre of financial services of the countries in the wider area”, he said.

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.