ATEbank announces the following regarding the reform of its pension funds (primary and auxiliary):
According to the recently enacted amendment to the law concerning the reformation of the Social Security System, as of 1st January 2007, ATEbank''s main pension fund will be absorbed by the National Social Security Fund (IKA-ETAM) and it''s auxiliary fund by the banks-specific fund (ETAT).
The contribution charges to the main pension fund (IKA-ETAM) will drop to National Social Security Fund''s levels (for the employees as of the 1st January 2007, whereas for the employer gradually and evenly over the next 5years).
That means that the charge for the Bank will drop from 25% currently to 13.33% by 2011 reduced by c.2.3% per year cumulatively.
Apart from the above the Bank will continue to pay the annual amount of EUR 28m for the next 15 years. That amount has been covering deficits of the main pension fund (IKA - ETAM), constituting an extraordinary charge in the P&L statement of the Bank.
Regarding the auxiliary fund (ELEM), ATEbank will pay in January 2007 an amount of EUR 280m (an amount which is already booked in the liability side of the Bank''s balance sheet) while another EUR 100m will be paid, as a special contribution, in 10 equal instalments over the next 10 years.
The contribution charges of the Bank to the auxiliary pension fund (ETAT) will be gradually and equally decline from 9% to 7.5% on salaries within 3 years or c0.5% per year cumulatively.
Finally, the law provides that ATEbank, apart from the above stated charges and its regular contributions as employer, will no longer be obliged to pay any additional amounts for the social security of its personnel.
All the above will have an overall positive effect to the Bank''s income statement.
The initial estimation is that there will be a cost saving, in year 2007, of at least 5% (over the Bank''s 2006 personnel cost) and gradually further savings in the years to follow until 2021, when the effect of the reforms will be fully realised.