Israeli banks to cut 5,100 workers in 2016-2020
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Israeli banks to cut 5,100 workers in 2016-2020

Reduction is in line with Bank of Israel's demand that they cut costs after being found more inefficient than their OECD peers

A man removes cash from a Bank Leumi ATM machine in the Meah Shearim neighborhood of Jerusalem (Nati Shohat/Flash90)
A man removes cash from a Bank Leumi ATM machine in the Meah Shearim neighborhood of Jerusalem (Nati Shohat/Flash90)

Cost-cutting measures introduced by Israeli banks will lead to a 12 percent reduction in their workforce in 2016-2020, Hedva Ber, the supervisor of banks at the Bank of Israel said in remarks at a business conference in Tel Aviv Sunday.

“The banks set out significant streamlining programs for the years 2016–2020, which would lead to significant savings of more than one billion shekels each year at the end of the programs’ implementation,” Ber said at the Globes Israel Business conference. “The savings would be directed toward technological improvements, from which the banks’ customers would benefit in the form of greater convenience in their interface with the bank; increased dividends, which would benefit the public through its pension savings; and reduced costs.”

The Banking Supervision Department a year ago instructed Israeli banks to take steps to become more efficient, in light of the fact that local lenders have higher costs are more inefficient than their OECD peers. As a result, the lenders have set out streamlining programs through which “about 5,100 employees would leave the banking system between 2016 and 2020, through voluntary retirement or natural retirement (most of which would not be replaced by new employees),” Ber said, according to an emailed text of her remarks. “This represents a gross reduction of 12 percent of the banking system’s workforce.”

In addition, the deployment of branches will be changed, and by 2020 the number of bank branches in Israel will be reduced by about 20 percent, she said, with more banks interacting digitally with customers.

“Streamlining in the banking system is essential in order to lower the cost of service to the public and in order to ensure that the banking system remains resilient in the face of future changes and that it can adjust to a technological and competitive world,” Ber said.

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