Written by: Aaron Katsman | April 15, 2009
Funny how banking was one of the most desired of sectors that Israeli workers wanted to gain employment in. That may be a thing of the past. According to Globes: “Banks include their salary costs in the “human capital” item of their financial reports, which is no wonder considering the extensive capital involved in running them. The aggregate salary cost in the banking system reached NIS 15.2 billion in 2008, and bank employees are traditionally among the best paid workers in the economy. The financial reports explain why.
An examination by “Globes” found, that after five years of continuous growth in the average salary cost at the banks, it actually declined in 2008. The average salary cost of the 48,761 banking system employees was NIS 25,400 last year, down from NIS 26,700 in 2007, not including privatization bonuses and severance packages. The reason for the 5% drop was because most banks did not pay bonuses for 2008 performance.”
With banking and hi-tech showing cuts in pay, what will become the new sector that is desired?
Written by: Aaron Katsman | February 21, 2009
As if the Israeli banking system needed more bad news, UBS came out yesterday with a negative report on the nation’s big banks. According to Globes: “The main event of the day was a report by UBS on Israel’s banks. UBS predicts that the banks will stay in the red through 2009 and 2010, and that they will need an aggregate additional capital injection of NIS 22.5 billion by the end of next year. The report sent the bank shares down. Israel Discount Bank (TASE: DSCT) had the sharpest fall of 4.1%. Bank Leumi (TASE: LUMI) fell 1.8% after also garnering a “Sell” recommendation. Two banks received a “Neutral” recommendation: Bank Hapoalim (TASE: POLI; LSE:80OA), which fell 1%, and Mizrahi Tefahot Bank (TASE:MZTF), which also fell 1%.”
We have spoken here about the potential for a large Israeli bank to fail. If you listen to the UBS report, that potential may turn into a reality.
Written by: Aaron Katsman | February 8, 2009
With hysteria running wild about paying anyone associated with the financial services industry a bonus, news that Israel’s best run and profitable bank, Mizrahi Tefahot, is looking to pay bonuses is big news. With countries looking to implement US Prez. Obama’s call for salary limits and no bonuses, Mizrahi Tefahot is bucking the trend. For good measure. Why shouldn’t employees who contribute to a successful and profitable business be rewarded for their hard work?
According to Globes: “Mizrahi Tefahot Bank is the only bank considering paying employee bonuses for 2008. Its return on equity in January-September was 12.1%, the highest in the banking system. Its profit was down just 4.3%, compared with the corresponding period of 2007, and compared with an 82% drop in the aggregate profits of the other banks. A knowledgeable source said that, given Mizrahi Tefahot Bank’s strong results, “it cannot be ruled out that its board will approve the payment of employee bonuses.”
It seems crazy to me that a bank in such a terrible climate has been run so well, and will not pay out bonuses. If quality management will not be compensated for their good work, why should they stay in their position? Who wants to be CEO if you aren’t going to make any money.
The board of Mizrahi Tefahot should approve the bonuses at once.
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Written by: Zack Miller | January 27, 2009
Anyone who has been to an Israeli bank knows that efficiency is not in the bank’s repertoire. If you enjoy standing in line for seemingly meaningless tasks, spend some time in an Israeli bank. And if you want to move your account to another branch
(even within the same bank), fuhggetaboutit.
So, why are banks so infuriating for customers. Most of it is in the legacy holdovers from the socialist days. There is a lot of paper pushing, waiting and more than anything, decentralization of tasks. Israeli bank branches act somewhat autonomously and processes are duplicated instead of being centralized. That means more jobs and more work for employees.
So, it’s not surprising to see that Bank Hapoalim workers are pushing back on a proposal to streamline the bank, even when no layoffs are on the table.
The workers committee announced, “We oppose the restructuring at the bank and reject the streamlining document written by the bank’s management.”
What’s in store for the bank’s restructuring?
“2009 will be a very tough year in terms of the bank’s revenue. There is a need for streamlining and cost-cutting. Savings and streamlining are not a one-time exertion, but a way of life. We must be careful and calculating over every shekel we spend, and we must pare all unnecessary fat.” — CEO Bank Hapoalim
For a country with an extremely advanced technology backbone underpinning the Israeli banking system, it’s time we get the delivery of service accordingly.
