NBG wants to cut fund financing

Finding a solution that would ensure the viability of bank employees’ pension funds must take account of each institution’s particular circumstances, the management of National Bank of Greece (NBG), the country’s largest commercial bank, said yesterday. National Bank’s Chairman and CEO Takis Arapoglou said that his bank’s contributions to its employees’ main and auxiliary pension funds is more than double that of other banks’. Specifically, NBG contributes an amount equal to 27 percent of employees’ salaries to their main pension fund and a further 9 percent to the auxiliary fund, whereas other banks, with the exception of Agricultural Bank, contribute 13 percent to their employees’ main fund and 3 to 4.5 percent to the auxiliary funds. «It is obvious that our heavier contributions to the funds… put National in a non-competitive position… This is compounded by the fact that those banks that incorporated the main pension funds into IKA (the Social Security Foundation) pass all the gains on to their shareholders,» Arapoglou said. He added that he viewed the transfer of NBG’s main employees’ pension fund into IKA as a precondition for NBG’s participation in any talks regarding the financing of the auxiliary funds. «National is willing to discuss a gradual reduction of its contributions from 27 percent to 13 percent, while recognizing the need to strengthen IKA’s finances,» he said. The NBG chief slammed the proposals for an across-the-board solution to the problem presented so far for mistakenly equating the banks’ legal obligations and presenting, according to him, a false picture of the deficits of auxiliary funds. «National has no legal obligation to cover any sort of deficits (in employees’ auxiliary pension funds), in contrast to other banks, which have specifically undertaken such commitments,» Arapoglou said. As for the deficit, he claimed that «because of our (increased) contribution to the auxiliary fund since 1995, the fund’s deficit will remain stable indefinitely. By contrast, that of other banks’ funds will keep increasing.» NBG does not envisage reducing its financing of the auxiliary fund. Arapoglou also said that the bank will focus on expanding its activities in other Balkan countries over the next three years by injecting large amounts of capital into its Bulgarian and Romanian subsidiaries. National is also considering partnership proposals from Turkish banks and has adopted a «wait-and-see» stance concerning the Russian market.