Banks will remain closed on May 8 and 9 in response to a 48-hour strike called by the Greek Federation of Bank Employees Unions (OTOE) following the failure of wage negotiation talks with bank representatives on Monday. Talks between OTOE and bank representatives, who met for the seventh consecutive time on Monday, broke down after the two sides failed to agree on the size of a pay increase over the next two years. Unionists are seeking a 6-percent pay hike for this year, while banks have made a counteroffer of a 3.5-percent rise this year – an increase of 0.2 percent on their offer at a previous meeting – and a 3-percent rise in 2003. Banking employees received a 4.2-percent pay increase last year. Bank representatives tried to ramp through the 3.5-percent pay increase at Monday’s meeting, OTOE claimed in a statement released on Tuesday, forcing the union to declare a 48-hour strike next week. It also warned of escalating strike action in the event that employees are not paid what they are worth. The laborious wage bargaining talks in the banking sector contrast sharply with this year’s straightforward talks between GSEE, the private-sector trade union grouping, and employer groups, which ended in a 5.4-percent pay rise for private-sector employees this year followed by a 3.9-percent increase in 2003. OTOE’s demand for a 6-percent pay hike comes as the banking sector finds itself struggling to come to terms with burgeoning operating expenses. According to Bank of Greece statistics, banks saw a 7-percent jump in operating expenses last year and a 4.7-percent surge in personnel costs. National Bank of Greece Governor Theodoros Karatzas bluntly told shareholders at this year’s annual meeting that the bank plans to unveil soon measures to rein in spending. The cost-cutting strategy comes as the bank is expected to report a massive fall in first-quarter profits as a result of bleak trading income revenues. In a report released last month, UK investment bank UBS Warburg said growing operating expenses in the Greek banking sector constitute a key concern and could be a drag on profitability. It said that staff costs are set to rise due in part to inflation and also to maturity and promotion benefits linked principally to the number of years in service. With banks making a major push into retail banking and subsequently swelling administrative costs, the sector could find cost-cutting a gargantuan task. Pay rises apart, unions and banks continue to hold divergent views on a shorter working week. OTOE wants to shorten the current 38-hour and 20-minute week to 35 hours while banks have proposed 37 hours.