Piraeus Bank's staff reduction plan is "credit positive"-Moody's
ATHENS, Sept 16
ATHENS, Sept 16 (Reuters) - Piraeus Bank's voluntary redundancy scheme under which it will shed about 12 percent of its staff islikely to help improve its credit rating, ratings agency Moody's said on Monday.
Piraeus, Greece's second-largest lender, said last week 2,182 employees had signed up for the scheme aimed at cutting costs after recent acquisitions, exceeding an initial target of 10 percent.
Greece's top four banks are updating their restructuring plans after their recapitalisation in June, aiming to squeeze their costs even further.
"Although we still expect Piraeus to remain loss-making at an operating level into 2013-14 owing to ongoing asset-quality challenges, this development is credit positive because it rationalises the cost base," Moody's said.
Piraeus, rated Caa2 negative for deposits and E/caa3 stable for stand-alone financial strength, bought smaller lender Geniki from Societe Generale last year and the healthy part of ailing state lender ATEbank.
It also acquired the Greek branches of Cypriot lenders Bank of Cyprus, Cyprus Popular and Hellenic Bank earlier this year to shield the country from the island's financial crisis.
The group also bought the Greek unit of Portugal's Millennium BCP, concluding its acquisitions drive.
"We estimate that the relevant cost savings will be significant at around 110 million euros ($145.0 million) per year, and expect the one-off redundancy costs will be around 100-130 million euros and expensed upfront this year," Moody's senior analyst Nondas Nicolaides said in a note.
The voluntary redundancy scheme is seen reducing Piraeus's annual staffing costs by about 14 percent and should help the group generate synergies from the acquisitions and render its cost base more sustainable, he said.
Piraeus, Alpha, National and Eurobank completed a 27.5 billion euro recapitalisation in June to restore their solvency after losses from writedowns on government debt and bad loans. ($1 = 0.7542 euros) (Reporting by George Georgiopoulos)