NICOSIA Bank of Cyprus BOC.CY is introducing a voluntary redundancy scheme for staff to cut costs after assuming the assets of a rival lender under an international financial program for the island.
The bank, owned by its biggest clients after their uninsured deposits were seized and converted to equity to help its recapitalization, said the scheme would be open to all staff, including those at subsidiaries.
Bank of Cyprus staff numbers swelled to about 5,700 after it took on 2,400 from now-defunct Laiki Bank, the island's second- largest lender which was forced to wind down after being hit by exposure to Greek debt.
Compensation would be up to 150,000 euros ($195,500) for each person leaving, the bank said, representing a months' salary for every two years' service, plus five months' pay based on the June payroll.
The bank said it would continue to offer medical and life insurance to departing staff to the end of 2014.
Etyk, the bank workers' union, branded the plan "arbitrary" after its attempts to get a better compensation package failed.
Under terms of an international aid package, depositors in Bank of Cyprus saw their accounts raided and converted into equity to recapitalize the lender, in a process known as a bail-in. The state also received 10 billion euros in aid from the EU and the International Monetary Fund.
A bank spokesman said the retirement plan did not include a target figure, rejecting earlier reports it forecast an initial departure of some 1,000 employees. The plan would be valid from July 8 to 26, with eligible staffers departing on July 31.
(Editing by David Holmes)