THE NEW chairman of troubled state-controlled Popular Bank yesterday warned that the bank would implement a new restructuring plan at the start of next month which could include closing local branches and staff cuts
Speaking to state broadcaster, Andreas Phillipou, who replaced outgoing chairman of the board Michalis Sarris on Thursday, said the Popular Bank will begin implementing its restructuring plan as soon as KPMG, the auditor enlisted to draw up the plan, completes its work by the end the month.
The plan will be based on reducing the size of the bank, which will likely mean reductions in staff and activity, he said, adding that any layoffs will be implemented as painlessly as possible.
The new chairman confirmed that the bank will order a full and in-depth investigation to clarify how the bank got into the mess it’s in, noting that responsibilities will be apportioned.
Earlier in the week, the bank- the island’s second largest lender- announced it will be shutting down branches in Cyprus and Greece, make staff redundant and cut wages as part of its restructuring plan. About 65 branches are reportedly due to shut down.
Phillipou took over the helm after Sarris was pushed into quitting by the Central Bank governor who told the former finance minister that it was his and the government’s wish for him to step down.
Sarris was appointed in early 2012 to oversee the bank's recapitalisation drive - a difficult task after the heavy losses suffered by the bank due to its huge exposure to Greek debt.
Popular’s failure to come up with the necessary capital forced the lender to seek state assistance in late June.
Cyprus, which has been shut out of international capital markets for more than a year, had to seek a bailout to meet its €1.8 billion obligation to the bank.
Sarris’ ouster followed the resignation of Bank of Cyprus CEO Andreas Eliades early in July, citing a lack of coordination in dealing with Europe's banking crisis as his reason for leaving.
Bank of Cyprus, the island’s biggest lender, rattled domestic markets by unexpectedly seeking €500 million in state support just prior to a regulatory deadline to bolster its core tier 1 capital last month.