The Bank of Cyprus (BoC), the island’s biggest lender, said losses incurred by its holding in Greek bonds that were devalued 74 percent last year and pushed Cypriot banks toward insolvency, has forced it to cut 300 workers in Greece through a voluntary exit program expected to reduce its payroll by some 12 per cent per year.
The Cyprus Mail said the bank said it would also close 11 branches in Greece, leaving it with 177 across the country. “Further cuts in the network are scheduled in 2013,” BoC said. The latest departures will cut staff down to 2,650 from 3,077 at the beginning of 2012. The bank’s current payroll is 110 million euros ($146.7 million) per year.
Beyond the losses from a write-down to Greek sovereign debt, in the past year, BoC has also suffered from ever-increasing provisions for bad debts because of its exposure to Greece’s crushing economic crisis.
The lender said it has managed to cut its Greek loan portfolio by 500 million euros ($667 million) since June 2012, while deposits rose by about a billion “contributing thus to a significant increase in the group’s cash flow.”
In September last year, BoC said it had around 10 billion euros ($13.3 billion) in loans in Greece, close to the entire Gross Domestic Product (GDP) of the island country. BoC requested 500 million euros ($667 million) in state assistance in June last year after failing to raise the necessary capital to meet a regulatory shortfall.