Filenews 20 May 2022 - by TheanoThiopoulou
Banks do not have time to announce plans for staff departures and close branches, gradually changing their operating model due to digital transformation and automation.
Approximately 500-510 employee of Bank of Cyprus employees are expected to see the exit in 2022, with 25% of its branches closing at the same time. This means that with the restructuring of the network, 20 branches will be closed down and 60 of the current 80 will remain. De facto, the announcement of the results yesterday by the CEO of the Bank Panicos Nikolaou and the action plan is bad news for the employees.
The management noted in the bank's bulletin "remains focused on further improving efficiency, through actions that include further optimising the number of branches and further options for the departure of full-time employees. Specifically, further restructuring of stores is underway, with the aim of achieving a reduction in the number of branches by >25% in the first half of 2022. It is also underlined that exit solutions will be available for the release of permanent staff, with the aim of reducing staff by about 15% in 2022." The staff is estimated at about 3400 people.
Mr. Nikolaou could not fail to be asked if there will be a plan for the voluntary exit of personnel, on the occasion of the plans of Hellenic for staff reductions only with redundancies. He limited himself to replying that the Bank of Cyprus has made staff reductions so far only with voluntary exit plans. Bank of Cyprus' staff costs amounted to €50 million for the first quarter of 2022, at the same levels on a quarterly and annual basis, as a result of the voluntary redundancy plans, the renewal of the collective agreement and despite inflation in the first quarter of 2022, as indicated in the presentation of the results. It is noted that the cost-to-revenue ratio is expected to increase in 2022, as revenues remain under pressure and operating expenses increase due to investment costs for higher IT/digitization technology, before improving to 50%-55% by 2025.
The detailed presentation of the results states that "in July 2021, the bank reached an agreement with ETYK for the renewal of the collective agreement for the years 2021 and 2022. The agreement concerned a number of changes including a revised system of grades and pay, which is linked to the value of the job, as well as the introduction of remuneration on the basis of the performance of each staff member, which will be part of the annual increase in staff salary. These two changes are long-standing objectives of the bank and are in line with best practice. The expected effect of the renewal of the collective agreement is the increase in personnel costs for the years 2021 and 2022 by 3-4% per annum and is consistent with the effect of corresponding renewals for previous years.
Profit of €21 million and bases for dividends
Profit after tax of €21 million for the first quarter of 2022, compared to €8 million in the first quarter of 2021, the Bank of Cyprus recorded. At the same time, it recorded a decrease in the ratio of NPLs to loans to 6.5% (2.7% after credit losses). Mr. Nikolaou said that "the first quarter was characterized by an economic recovery, which we supported, as it turns out, with the concession of record new loans, amounting to €618 million. This marked the third consecutive quarter of growth of new lending at an accelerated pace. Our new lending in the first quarter reached higher levels than the corresponding period before the pandemic, while maintaining strict lending criteria."
In February 2022, the group revised its medium-term strategic objectives, emphasizing on value creation for shareholders and increased its medium-term target of return on tangible equity (ROTE) to over 10% (2025), laying the foundations for dividend distribution from 2023, depending on performance and after obtaining the necessary approvals.
