BoI: Fewer bank employees, higher salary costs

2,000 executives earn over NIS 35,000 a month, and 356 more than NIS 80,000.

The banks have invested many resources in various streamlining plans in recent years. As a result, the number of employees at Bank Hapoalim (TASE: POLI), Bank Leumi (TASE: LUMI), and Israel Discount Bank (TASE: DSCT) fell by over 1,800 in 2012-2013. Despite these efforts, however, there has been no significant change in the banks' operating efficiency ratios. The banks explained this by saying that the various plans would take time before their effect is felt.

An analysis of the salary distribution among the 45,600 employees in the banking system published today by the Bank of Israel, however, seems to indicate that the streamlining programs at all of the banks may not be so effective. The figures show a steep drop for the second straight year in the number of low-salaried employees at the banks, coupled with a rise in the number of high-salaried employees in 2013.

The banks have made deep cuts in the number of their temporary and inexpensive staff. The number of those earning at most NIS 5,000 tumbled by over 80%: there were only 274 such employees at the end of 2013, compared with almost 1,500 in 2012.

On the other hand, the number of jobs with a salary cost of NIS 20,000-30,000 jumped almost 25%. There were 12,200 jobs in this group last year, compared with 11,400 in 2012. The number of jobs with a salary cost of NIS 30,000-50,000 was up 14%, reaching 7,628. The Bank of Israel looks askance at these figures; in unofficial conversations, sources at the bank said that these figures ran counter to the need for better efficiency ratios at the banks.

The operating efficiency ratios of banks in Israel are lower than the usual ratios around the world. "Improving efficiency and reducing operating expenses at the banks is likely to reduce the cost of financial products and services," the report states, thereby hinting that if real efficiency is attained at the banks, they will be able to offer their customers lower prices for services.

Why is the number of high-salaried employees creeping upwards, despite the efforts at streamlining? A number of factors are believed responsible. The banks achieved good results last year, resulting in the distribution of bonuses at all the banks, which boosted the average salary cost. On the other hand, two major banks, Bank Leumi and Discount Bank, did not distribute bonuses in 2012.

The report also found that 2,000 bank executives earned over NIS 35,000 a month, and 356 more than NIS 80,000 a month.

Published by Globes [online], Israel business news - - on July 1, 2014

© Copyright of Globes Publisher Itonut (1983) Ltd. 2014

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