Banking sources say that Bank Hapoalim (TASE: POLI) will reduce its headquarters staff by 20-30%, or 400-650 persons, as part of its headquarters streamlining plan announced two months ago. The bank will present the plan in a few weeks. The headquarters employees will not be fired, but will be transferred to the operating center in Beit Dagan, outside Tel Aviv, and to branches. The plan will also include early retirement.
Bank Hapoalim is also reducing its staff by outsourcing. Positions vacated by early or normal retirement will not be filled. The bank is also expanding some operations, including mortgage advice, and opening new branches, and some of the headquarters staff will fill the new positions.
Bank Hapoalim CEO Zion Kenan is in charge of the headquarters streamlining plan, which will take 18 months to carry out. The plan has two objectives: eliminating redundancies and flattening the management hierarchy, by eliminating middle management positions. As part of the plan, two months ago, the bank announced the elimination of its customers assets division.
Other banks are also streamlining. In February, Bank Leumi (TASE: LUMI) announced that it will reduces its workforce by 8% by 2014, eliminating 800 jobs, including 300 jobs during 2012. The bank says that it will achieve its goal through retirement and natural turnover of employees. The bank reportedly has around 5,000 high-paid longstanding employees, half of whom are due to retire within ten years, which will facilitate its streamlining plan.
The banks' restructuring is due to their low operational efficiency caused by surplus employees, especially among longstanding employees. Bank Hapoalim's efficiency ratio was 62.4% in the first half of 2012, and Bank Leumi's ratio was 70.8%.
Although the banks are not in crisis, they expect lower revenue due to the economic slowdown, rising competition, and greater public awareness. The Bank of Israel and others have criticized the banks' low efficiency, prompting the streamlining plans, despite restrictions caused by rigid salary agreements and strong workers committees at some banks.
Published by Globes [online], Israel business news - www.globes-online.com - on October 10, 2012
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