The Bank of Israel today published the salary distribution of bank workers, after collecting data from the banks for almost a year. The data show that the salary cost of 48% of bank workers was NIS 210,000 a year (NIS 17,500 a month).
In contrast, 18.2% of bank employees, or 7,000 people, have an annual salary cost of over NIS 360,000 (over NIS 30,000 a month).
The data reveal the wide salary gaps between the different levels at the banks. For example, the salary cost 10% of bank workers is up to NIS 60,000 a year (NIS 5,000 a month), but their salary cost accounts for just 1.3% of the banks' total salary cost (even though they account for 10% of the banks' workforce).
In view of the figures, the Bank of Israel has published draft regulations stating that the banks must improve the transparency of information to the public about salaries and compensation. The draft includes several items, including a requirement to strengthen the compensation policy-making process, distinguishing between fixed compensation and bonuses and grants, and a requirement that the board of directors compensation committee will set in advance the maximum ratio between the fixed salary and bonuses.
The Bank of Israel also proposes that the mechanism for awarding bonus and compensation payments, on top of salaries, will be adjusted to the types of risk at a bank, and that payment of at least 50% of it will be spread over a period of at least three years.
"The banking system is characterized by high salary costs and low operating efficiency compared with other banks in the world. Regulating the banks' compensation system is essential in order to strengthen the link between employee compensation and the banks' objectives," said Supervisor of Banks David Zaken.
Published by Globes [online], Israel business news - www.globes-online.com - on June 3, 2013
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