Barring a last-minute change, Bank Hapoalim (TASE: POLI) is expected to present another streamlining plan next week, including voluntary retirement for hundreds of workers. Sources inform "Globes" that the main innovation in the current plan, in comparison with previous plans in recent years, is the inclusion of younger workers. Previous plans were aimed primarily at workers in their late 50s.
It is believed that younger workers will be offered 270% compensation. Older workers (apparently starting at age 53) will be offered a retirement grant, and starting at a given age, those workers will also receive a bridging pension until they reach retirement age.
The plan, which was recently submitted to Supervisor of Banks Dr. Hedva Ber for approval, will benefit from an accounting concession granted by Ber for streamlining plans submitted by the end of the year. This concession means that the cost of the plan will not affect the bank's capital adequacy ratio. This is the first streamlining plan led by Bank Hapoalim CEO Arik Pinto, who took up the position three months ago. Pinto is very familiar with the bank's economizing measures, in which he played a key role in his previous positions at the bank.
The plan may be offered to a relatively small number of workers in the first stage, and be expanded according to the demand. Bank Hapoalim is planning to slash hundreds of jobs in the next three years through voluntary retirement, workers reaching retirement age or resigning on their own initiative, and the laying off half of the bank's temporary staff.
Bank Hapoalim has introduce a series of stringent economizing measures in recent years, including a number of voluntary retirement plans resulting in the retirement of over 2,000 workers.
The bank's efficiency ratio is relatively good (the second best in Israel, after Mizrahi Tefahot Bank (TASE:MZTF)), as a result of economies of scale and economizing measures over the years. The bank is constantly cutting expenses, reflected in the closing down of an average of 10 branches a year, among other things.
Bank Hapoalim's current streamlining program follows plans launched by Bank Leumi (TASE: LUMI) and Israel Discount Bank (TASE: DSCT) in recent months, which also offered increased compensation of around 270%. The high compensation generated strong demand for the plan at Bank Leumi, with 700 employees registering for the plan within a few weeks. Like Bank Hapoalim, Bank Leumi also extended its voluntary retirement program to younger workers.
Dividend on the way
Simultaneously with the planned economizing measures, Bank Hapoalim also announced today that it had obtained authorization from the Supervisor of Banks to increase its dividend rate from 20% of its quarterly profit to 30%. The rate will be revised in the bank's third quarter reports scheduled for publication next month. The announcement was unexpected; it was believed that the bank would be authorized to increase its dividend only after the conclusion of the US authorities' investigation into suspicions that the bank aided its US customers in tax evasion. A few weeks ago, Bank Hapoalim announced that it would make a $70 million provision for this investigation in its upcoming reports, despite not having reached a settlement on the matter with the US authorities.
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2016
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