"We've lagged in streamlining compared with other banks. We must deal with this issue, which is our priority," Bank Leumi (TASE: LUMI) CEO Rakefet Russak-Aminoach told analysts at a meeting at the bank yesterday. This was her first analysts' meeting since taking up her post as CEO in May.
Russak-Aminoach's main topic was the streamlining that Bank Leumi was undertaking. She said that the bank was picking up the pace of the plan in order to close the gap with Bank Hapoalim (TASE: POLI), which launched its streamlining plan three years ago.
Bank Leumi announced a streamlining plan in February, which includes an 8% reduction in its workforce by 2014. The bank will eliminate 800 positions, including 300 in 2012. Half of the 800 jobs shed will be at the bank's headquarters and half at branches, and will include 300 positions lost through natural retirement, which will not be replaced. The bank will reduce the positions by replacing fired temporary employees with permanent employees.
At the center of the streamlining plan is the merger of Leumi Mortgage Bank into Bank Leumi, which will be completed this year, and result in the elimination of Leumi Mortgage Bank's headquarters.
Russak-Aminoach said that the streamlining plan was being implemented in collaboration with the bank's workers committee. "We came in peace to the workers committee," she said, "The workers committee has good and smart people, with whom there is dialogue and cooperation."
Russak-Aminoach declined to respond to questions about the sensitive issue of the automatic annual pay hike for Bank Leumi employees, saying only that there were a range of issues which could be formulated and presented to the workers committee.
Bank Leumi's streamlining plan will save NIS 350-400 million a year. The bank's operating efficiency (the ratio of operating costs to revenue) was 70.8% in the first half of 2012, and it plans to reach a ratio of 65% through the streamlining plan.
Russak-Aminoach said that she had no rabbits to pull out of her hat, and that the bank intended to pursue and focus on its current business. She said that Bank Leumi was strong among mid-sized customers (through its commercial division), but said that its retail business needed improvement, and that it would strengthen and improve its customer orientation.
Although Bank Leumi reported a credit loss of NIS 558 million in the first half, Russak-Aminoach, who previously headed the bank's business division, was optimistic, saying, "Leumi has the best credit portfolio in the banking industry."
Russak-Aminoach declined to set targets for Bank Leumi's expenses, saying that it was difficult to make forecasts during this period of regulatory change. "The return on capital will range between a low-single digit and a high double-digit," she said.
Published by Globes [online], Israel business news - www.globes-online.com - on October 23, 2012
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