ECONOMY

Banks and unions fail to find common ground on pension fund issue

The protracted efforts by the government, the banks and their employees to solve the pressing problem of the sector’s unfunded pension liabilities and unify the various funds suffered a serious setback yesterday. Six months after the issue started and following several rounds of negotiations, the Federation of Bank Employee Associations (OTOE) rejected the employers’ proposals by an overwhelming majority. The negative stance of the representatives of some of the major bank employee associations – particularly those of National, Alpha and Emporiki – acted as a catalyst. All three agreed that the banks’ final proposal was not accompanied by guarantees on the future of the new single supplementary fund, did not cover all bank workers and did not protect the Social Security Foundation (IKA) from the heavy cost of main retirement payments. The issue has become pressing in view of the requirement of International Financial Reporting Standards, under which all listed firms have to report results this year, that they write down their unfunded liabilities on their equity capital. Emporiki Bank has the biggest problem, as the requirement would seriously erode its capital base. The common position of the three bank unions shows that the issue is perhaps the only one on which they can converge. Reports that the government was about to undertake an initiative for tackling the problem separately for Emporiki Bank seems to have strengthened their common stand. Emporiki’s management and union are due to meet again tomorrow, while OTOE has threatened that any attempts at unilateral solutions would amount to casus belli. According to other reports, the European Commission is looking into whether any government financial contributions to solving the issue violates competition regulations.