The domestic banking system is undergoing a profound operational restructuring and digital transformation, with voluntary staff separation plans now serving as the primary tool for containing labor costs and renewing the workforce.

A common thread among these programs is their alignment with the provisions of the new tax reform, which sets the tax-free threshold.

Alpha Bank Cyprus

The most recent announcement comes from Alpha Bank Cyprus, whose voluntary retirement plan falls within the framework of its strategic plan for 2026. According to reports, the Bank has already announced the plan to its staff, while also informing the leadership of the Cyprus Bank Employees’ Union (ETYK).

The plan will be implemented based on clear terms and criteria, in accordance with all applicable legal requirements, allowing eligible employees to evaluate the framework and make their decisions based on their personal and professional needs.

The key financial parameters of the plan are as follows:

• Maximum Compensation Amount: The upper limit of the financial benefit is set at €225,000.
• Tax Treatment: Under the current tax framework, amounts up to €200,000 remain tax-exempt, while any amount exceeding this limit will be taxed at a rate of 20%.
• Additional Provision (+10%): An additional 10% compensation is provided for specific groups of employees, with the aim of ensuring a balanced and fair implementation of the plan.
  • This provision applies to: Employees working outside the districts of Nicosia and Limassol. Employees working for or transferred to the Bank from DoValue.

As the Bank states, the voluntary plan is part of Alpha Bank’s broader strategy to develop its services in the Cypriot market and enhance its operational flexibility.

Alpha Bank Cyprus’ plans for the future are based on three key pillars. First, the Upgrade of the Operational Model, with an emphasis on more efficient coordination, the simplification of internal processes, and the establishment of a strictly customer-centric approach. Digital Transformation and the New Career Framework, which introduces a revamped framework for the Alpha Bank Group, it offers a clear and modern environment for professional development, taking on responsibilities, and harnessing employee talent.

Bank of Cyprus

In early summer, Bank of Cyprus also launched another targeted, small-scale voluntary retirement plan. In the circular posted by Bank of Cyprus, the program remained open for applications until June 19, aiming for the departure of a very limited number of employees, not to exceed 40 people.

As noted, this is not a large-scale program indicating a need for mass departures, but rather a targeted initiative aligned with the Group’s current operational needs.

The plan offers the option of early retirement on favorable terms to employees who are nearing retirement age. The key eligibility criteria and financial compensation are as follows:

• Eligibility Criteria: Staff members who have completed at least 25 years of service with the Group or are over 55 years of age are eligible to apply.
• Compensation Amount: The maximum amount of the lump-sum payment is €200,000, which remains fully tax-exempt.
• Taxation and GESY: For any severance pay amount exceeding €200,000, a 20% tax rate applies under the recent tax reform. In addition, a 2.65% contribution to the General Health System (GESY) is levied on the total compensation amount.

Additional incentives for those over 60

Special provisions are in place for employees who have reached the age of 60 and choose to join the plan. These employees will benefit from:

1. An additional 10% increase in the final amount of their severance pay.
2. Continued participation in the Group’s Health Fund and Life Insurance Plan until the date of their normal retirement.

Eurobank

Eurobank also followed the practice of voluntary exit plans; last March, a plan took effect with the primary goal of having at least 300 employees leave the Group’s domestic operations. The plan, which has already taken effect, remained open for applications for a period of two weeks, with a deadline of March 23, 2026.

The plan was originally scheduled to be announced earlier; however, recent developments and geopolitical uncertainty stemming from the war in the Middle East temporarily “froze” management’s announcements.

This is the second early retirement plan released by Eurobank since its acquisition of Hellenic Bank. This time, the program was tailored to the needs of the now-consolidated Eurobank Ltd, which is in the process of operational integration. The merger of the organizations, combined with the accelerating digitization of operations, has reduced staffing needs, despite internal staff transfers to departments with increased demands.

Permanent employees from all Group companies were eligible to participate, provided that, as of the plan’s start date, they cumulatively met the following criteria:

• They have completed at least 5 years of continuous service.
• They are 35 years of age or older.

It is worth noting that this is the first time that employees of the subsidiary insurance companies (formerly Hellenic Life, formerly Pancyprian Insurance, formerly CNP Cyprialife, and formerly CNP Asfalistiki) have access to the plan. The Executive Committee reserves the right to reject applications if it is determined that an executive’s departure would affect the smooth operation of the organization.

The Bank has set the maximum amount for the one-time severance payment at €200,000. Under the tax legislation passed in December 2025, this amount remains fully in effect.

The basic lump-sum payment may not exceed 70% of the total gross compensation the employee would have received until reaching the age of 65 (this restriction does not apply to additional benefits). The calculation takes into account years of service, the age coefficient, and the annual gross salary (gross monthly salary before deductions × 13).

In addition, depending on the employees’ background, the following adjustments to the base salary calculation were decided:

• Former Hellenic & Insurance staff (covered by collective bargaining agreements): Addition of €50 to the base monthly salary and 100% of the annual raise (provided these were not already granted in previous months).
• Former Eurobank Cyprus employees and other staff: A flat 5% increase in the calculation.
• Additional Bonuses: Possibility of increasing the lump-sum payment up to €4,500 under specific conditions related to the difference from previous bonuses or gifts from 2025/2026.

To ensure the plan’s success, management has introduced “early-bird incentives” for the first 125 employees who submit an application and have it approved. They will receive:

1. An additional 10% increase in the lump-sum severance payment.
2. Doubling of coverage: Extension of medical care and life insurance to 4 years (instead of the 2 years provided for in the basic plan).

It should be noted that if the total number of approved applications exceeds 250, then the above additional benefits will be automatically granted to all employees who retire, without exception.

For all employees who leave, the plan provides for:

• Medical coverage (Basic): For 2 years (or until normal retirement or finding new employment) through their current health insurance fund or, for those who are not members, through the ETYK Health Insurance Fund, with existing contribution rates maintained.
• Life Insurance (Basic): Continuation of the group insurance plan for 2 years with the same insured amount.
• Vacation & Funds: Payment of the balance of annual vacation pay (subject to tax and GESY) and immediate payment of benefits from the Provident Fund.
• Banking Facilities: Maintenance of favorable employee terms for existing and new loans, credit cards, and deposit interest rates. Conversely, the right to an overdraft will be terminated unless a special agreement is signed.

For Eurobank, the current plan represents the first major restructuring initiative since the previous targeted program in March 2025. At that time, 154 employees had left (approximately 7% of the Group’s workforce at the time), resulting in estimated annual savings on personnel costs of €11.2 million for the organization. The new plan for the 300 employees is expected to bring about even more radical changes to the structure and operating costs of the consolidated organization.