ECONOMY

Deal on social insurance problem keeps eluding banks and employees

The Federation of Bank Union Associations (OTOE) said yesterday that a new meeting with employers on resolving the hot-potato issue of banks’ unfunded social insurance liabilities had ended without any substantial progress. OTOE said in a statement there could be no agreement unless it included the setting up of a single fund for all bank employees without exception, accompanied by watertight guarantees for existing insurance provisions. It noted that banks called for related issues raised by OTOE also to be addressed by the government, which has said it will contribute to the cost of a solution to the extent of its holdings in banks. It has also said, however, that if banks and OTOE fail to reach agreement, it will try to reach individual settlements in each bank. The issue has to be resolved relatively soon, as banks will have to apply International Financial Reporting Standards this year, which require them to write down their unfunded liabilities on their equity capital. Emporiki Bank has the most serious problem. Separately, Nikos Nanopoulos, CEO of Greece’s third-largest lender, EFG Eurobank, said he was opposed to a single social insurance scheme, to be financed by all banks, arguing that it would lead to a distortion of competition and a disproportionate burden on the Social Security Foundation (IKA), in which employees would be integrated. «We are not a priori against a comprehensive solution, provided it satisfies certain basic criteria, including the transparency of terms, a relatively balanced cost allocation between the banking system and the Greek taxpayer, and avoiding a distortion of competition,» he said. Nanopoulos estimated banks’ combined actuarial liabilities in the order of 4-5 billion euros.