articles | 25 July 2018

Competition watchdog green lights Co-op deal

Cyprus’ competition watchdog approved Hellenic Bank’s agreement with the Cyprus Cooperative Bank, lifting one more obstacle for the acquisition of the latter’s operations, Hellenic Bank said, hours before the government agreed to offer more compensation to Co-op workers affected by the deal.

The bank “has received clearance of the acquisition by the Commission for the Protection of Competition,” it said in a statement. “On 24 July 2018, the commission for the protection of competition informed the company of its decision that… the acquisition is compatible with the functioning of competition in the market.”

Hellenic added that it will “keep investors informed of any developments relating to the acquisition to the extent required by applicable laws and regulations”.

The competition watchdog’s go ahead removes another obstacle in the completion of the deal. On July 8, the parliament passed legislation to modernise the foreclosure and insolvency framework to make it easier for banks to go after strategic defaulters and reduce their €20bn mountain of non-performing loans. This was a condition set by the European Commission’s competition watchdog for approving the deal.

Another obstacle remaining to be overcome is the unions’ resistance to a voluntary retirement scheme which prompted the government to allocate more funds to it. A plan which provides for the compensation of 900 Co-op workers out of a total of just under 2,700 with a minimum of €20,000 and up to €170,000 was initially rejected. PEO, SEK and Pasydy are currently in negotiations with the Co-op to have some of its provisions improved.

Following a meeting of the council of ministers on Wednesday, Government Spokesman Prodromos Prodromou said that consultations between the bank and the unions were in their “final stage”.

Hours later, Savvas Toulloupos, who represented PEO in the meeting with the Co-op’s management said that the bank submitted an improved scheme after the cabinet decided to approve more funds to compensate Co-op workers.

The Cyprus News Agency (CNA) described the new proposal as a take-it-or-leave-it offer.

Toulloupos said that the unions will discuss the new proposal on Thursday while an extraordinary general meeting of the Co-op will have to approve the scheme on Tuesday. Staff members will then be given a deadline to decide whether to apply for it, seek to work for Hellenic Bank or work for the legacy Co-op which will manage its €7bn in non-performing loans.

Bank workers’ union Etyk threatened to strike and disrupt the smooth transition to the post acquisition era unless its demands for a minimum compensation of €100,000 and up to €200,000 were met.

Toulouppos declined to describe how far the offer had been was improved but said it included the amount to be paid as compensation.

The Co-op’s compensation offer as it stands will allow also up to 15 former workers who had already benefited in the past from schemes offered by other banks to also take advantage of the one submitted by the state-owned bank.

George Panteli, a senior finance ministry official, said on Tuesday that the scheme cannot exclude workers who have benefited from similar schemes in the past from participating in this one as it would constitute a form of discrimination.

“You cannot treat these workers differently for legal and other reasons,” he said.

Panteli added that like in the case of voluntary retirement schemes in the banking sector, their compensation will also be tax-free.

The plan of the Co-op, which became a casualty of its failure to reduce its non-performing loans stock fast enough to avoid going out of business after receiving €1.7bn in taxpayers’ money, has meanwhile attracted criticism from Auditor-General Odysseas Michaelides.

“A worker with 10 years in service will get 2.5 annual salaries while under the previous schemes of the state would receive one annual salary,” he wrote on his Twitter account on Wednesday.

“How generous the technocrats of the finance ministry and the administration of the Cyprus Cooperative Bank are with taxpayers’ money!!!,” he added.

Source: Cyprus Mail

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