The hot issue of banks’ unfunded social insurance liabilities, which appeared to have taken a step forward toward a solution with the unveiling of a plan by Piraeus Bank President Michalis Sallas early this month, took two steps backwards with the deadlock reached at the sole meeting between bankers and employees 10 days ago. The plan largely foundered on the objections of the National Bank of Greece (NBG), which said that the proposed allocation of the costs of an integrated fund between banks in proportion to their liabilities was against the interests of its shareholders. NBG cited legal changes introduced in the past before its listing on the New York Stock Exchange. Nevertheless, the problem of the viability of the individual bank funds is a real one and will not go away. Banks will have to grapple, forced by the obligation to adopt International Financial Reporting Standards (IFRS) in 2005, which require them to account for these unfunded liabilities in their balance sheets. The views of the other side, the bank workers, are set out in the following interview with Dimitris Tsoukalas, the recently elected chairman of the Federation of Bank Employees’ Unions (OTOE). The issue seems to be back at zero. What are your predictions? I do not think we are back at zero, because no one can discard all that has been achieved so far, even though a specific result has not been forthcoming. Both sides were given the opportunity to express their views. OTOE proposed a single fund for all banks but the other side showed it has no unified stance, as the Sallas plan contained only two principle points. Obviously, the bankers have widely diverging views on how the issue is to be solved. What is the reason for these divergences? They are really no more than a pseudo-problem… How is it a pseudo-problem? NBG has converted its fund from one of «set provisions» to one of «set contributions,» and is, therefore, not obliged to introduce changes in view of IFRS. So, its objections have a real basis. We dispute NBG’s claim. The bank’s auxiliary pension fund has a charter that sets out very specifically its obligations regarding the level of its provisions. If the fund becomes unable to pay what its charter stipulates, it is a real problem, not merely a legal one. NBG’s President Takis Arapoglou has remained silent on this. What position will OTOE adopt as regards Emporiki Bank, in which the government – the chief shareholder – will have to effect a share capital increase in view of the fact that the bank’s liabilities are so large that they will threaten its capital base? I am not sure the government can painlessly order the funds to effect capital increases. We believe that solutions must be found for Emporiki as well, within an overall framework. We shall never say we do not care about the banks. Indeed, we care for them more than the bankers themselves, because we have been there for a generation. Are there any aspects of the social insurance funds that must be rationalized? Of course there are. However, if we adopt a case-by-case approach, it will be difficult for us and the bankers to rationalize certain extremities. They are mistaken in a business sense, as well, if they think they can solve the problem bank-by-bank, because this will cost them much more than one integrated solution. The big problem is the auxiliary funds, not the main pension funds, to which both government and bankers agree to contribute. What type of social insurance regime predominates in banks elsewhere in Europe? There are many forms but it is evident that they all have a minimum state pension. At a higher level, either banks or employees set up supplementary funds, which have very high reserves. These have professional managers and have not been robbed by zero interest rates as ours. The biggest supplementary fund is found in the Netherlands, in which workers pay minimal contributions. The richest such supplementary fund is that of Californian teachers; its reserves, in fact, exceed Greece’s gross domestic product. I myself am open to such ideas. However, we cannot write off yesterday and today in view of what we can do tomorrow.