Bank Hapoalim (TASE: POLI), managed by Zion Keinan, today announced additional particulars of its new cost-cutting plan, reported exclusively in "Globes" last week. The bank's financial report, published last Tuesday, merely states that the bank will provide NIS 390 million in the fourth quarter for streamlining, while more details are now being revealed. According to the report, the cost-cutting plan is expected to be implemented over two years (2015-2016). 300-350 jobs will be eliminated each year, i.e. a two-year total of 600-700 (the bank had 10,139 employees as of the end of 2014) in its branches and headquarters.
At a press conference held by the bank last week, Keinan said that the number of lay-offs had not yet been decided. "We haven't decided on a final number. With us, streamlining doesn't come from a place required to cut; it's done in cooperation with the workers and managers," he said.
Several methods will be used to eliminate jobs. First of all, the bank will carry out a voluntary retirement program, for which it has provided NIS 390 million; 300-400 workers are expected to join it. The other cuts will be in temporary and contract workers, and retiring workers who will not be replaced.
The bank points out that the streamlining plan is not confined to job cuts. "The streamlining plan includes possible changes in the structure of the bank's business, reduction of physical space in its branches and offices, and retraining of workers whose positions are being eliminated in order to place them in other positions in the bank," the bank wrote today. The bank also published a forecast that included a drop in some of its expenses as a result of streamlining. The bank believes that it will save NIS 80-100 million in expenses next year, and NIS 150-170 million annually starting in 2017.
Most of the savings in expenses will come from salaries, with additional savings resulting from the reduction in space in offices and branches. The bank's salary expenses totaled NIS 5.3 billion in 2014, and the planned streamlining program is designed to save 3% of that in the long term.
Not trivial
The decision by Israel Securities Authority chairman Shmuel Hauser to require Bank Hapoalim to publish further details of its streamlining program is no small matter.
For example, last year, the bank also implemented a streamlining plan, for which it allowed NIS 440 million. In contrast to the current plan, the Securities Authority did not require the Bank to publish further details. Other banks that announced streamlining programs over the years were also not required to publish details, such as the forecast cost savings, as Bank Hapoalim is now being required to do. It appears that the Securities Authority is closely following Bank Hapoalim's announcements, and it cannot be ruled out that the reason is the US investigation into suspicions that the bank aided its US customers in tax evasion.
The Securities Authority has discovered that Bank Hapoalim and Mizrahi Tefahot Bank (TASE:MZTF), which are being investigated in this affair, made provisions for the affair in recent quarters without disclosing them in their reports, while the reports stated that they had no indication of the extent of their loss in the affair. Although this non-disclosure was coordinated with the Bank of Israel, the Securities Authority did not like it, to say the least, and demand that the two banks fully disclose their allowances and their progress in the investigation in the financial statements published last week. They also demanded full disclosure by the other banks in this matter, even though they are not under investigation. It is possible that since this affair took place, the Securities Authority has been more closely monitoring the various announcements by banks in their reports.
Published by Globes [online], Israel business news - www.globes-online.com - on March 15, 2015
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