2 Min Read
TEL AVIV, Dec 11 (Reuters) - Israeli banking regulator Hedva Ber said on Sunday she expects the banking system to save at least 1 billion shekels ($261 million) a year starting in 2020 from mandatory job reductions, branch closures and embracing more technology.
Ber, the Supervisor of Banks who a year ago ordered banks to become more efficient, said about 5,100 jobs will be cut from Israel's largest banks over the next five years, or a net 10 percent of the total workforce.
At the same time, 200 bank branches -- 20 percent -- will be closed or merged, she told the Globes business conference.
"Banks in Israel compared to the rest of the world are not efficient," Ber said, noting that Israeli banks' expenses stand at 69.4 percent, versus 63.8 percent for the OECD group of wealthy nations. "Banks need to adapt to a new world."
That, she said, includes a move to digital branches and services where customers can bank by phone apps and the internet, which would lower fees and overall costs.
Israelis have long complained about banks charging too many fees, including for making deposits and withdrawing money from their own accounts.
To encourage banks to become more efficient and offer early retirement plans, Ber offered to allow higher dividend payouts, the spreading of the cost of the streamlining steps and an ability to implement them without negatively affecting banks' abilities to meet capital adequacy requirements.
Israel's largest bank, Hapoalim, said in October that 1,500 workers will take early retirement from 2017-2020 at a cost of 1.2 billion shekels, in addition to 300 workers expected to leave the bank voluntarily in 2016.
Leumi, Israel's second-largest bank, plans for about 700 workers to retire early this year as part of a multi-year efficiency. Israel Discount Bank, the country's fourth-largest, expects to reduce its workforce by 1,000.
$1 = 3.8260 shekels Reporting by Steven Scheer; Editing by Ros Russell