Etyk threatens action over provident funds, slams Fiscal Council chairman

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By Stelios Orphanides

Bank employees’ union Etyk said that it is considering ways to pressure the government to fully compensate members of provident funds of the two major lenders who suffered losses in the 2013 banking crisis and once again accused the chairman of the Fiscal Council of bias and hatred.

The union, which has in recent weeks embarked on a public relations campaign by meeting the leaders of political parties, said that after the conclusion of all these meetings, “and depending on their outcome, the situation will be evaluated before our next steps are determined”.

“We stress our determination to ask our collective bodies to take the necessary decision,” the union, which is well known for its militant rhetoric and practices, said in a statement on Friday. “Let us note that the Fiscal Council chairman’s hatred of bank workers and their union is well known, since he made sure to remind us of it since he used to write articles on a daily basis as a journalist at Politis”.

Demetris Georgiades, the chairman of the fiscal watchdog tasked with monitoring the drafting and implementation of the budget to prevent fiscal derailment, should have known that the reinstatement of funds was a government and parliament commitment, Etyk said.

The government announced in July to make available €166m to compensate affected bank workers over the next years, on top of the €300m budgeted for this purpose in 2013. The government, which initially pledged to compensate members of provident funds for 75 per cent of their losses, included in a July cabinet decision a €100,000 cap in the compensation to fund members in order to avoid giving them preferential treatment over depositors.

Etyk is angered over the government’s decision regarding its members working for Bank of Cyprus and Cyprus Popular Bank (Laiki), and also accused finance minister Harris Georgiades on Wednesday of open hatred of the union.

Bank of Cyprus customers saw 47.5 per cent of their funds converted into equity as part of Cyprus’s bailout agreement, while those at Laiki lost everything in excess of the government guaranteed amount of €100,000.

The chairman of the Fiscal Council is not related to the finance minister and worked as a commentator for Politis newspaper until 2014, the year he joined the council. The council said on August 22 that as institutional investors, provident funds had a legal responsibility to avoid losses through risk concentration and warned the government that giving in to Etyk’s demands would increase the systemic risk.

On Friday, Etyk’s comments prompted a fresh response from the council which dismissed the union’s allegation that its position on the matter have to do with its chairman’s personal opinions.

The opinions expressed and any data or argumentation included in the previous announcement -which made no explicit reference to Etyk- “had been discussed, prepared and approved unanimously by the president and the two members of the council,” Marios Zachariadis and Alkis Loizides.

On Wednesday, the supervisor of provident funds and head of the Social Insurance Services of the Ministry of Labour, Theophanis Tryphonos, said that he repeatedly asked the management committees of provident funds to avoid risk concentration as early as 2010 and 2011 and even weeks before the banking crisis.

Tryphonos reiterated that he advised funds managed by bank workers to disperse risk after banks agreed to disburse €1.5bn in gratuity fees in January 2013.

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Stelios Orphanides is a journalist at CyprusBusinessMail.com. To contact Stelios Orphanides: [email protected]

  • Bob Ellis

    So glad I closed my BoC account, I would strongly advise others to do the same…..

  • KAITANOU

    Its very clear that the whole system of provident funds needs reforms. For instance Provident funds should be managed by a few professional organizations and the employees for whom the funds exist should have a lot more say than do the employers. in fact the employers say should be severely if not completely be eliminated.

  • KAITANOU

    perhaps those running the funds should somehow be penalised for failure to spread risk