Israel Discount Bank (TASE: DSCT) has unveiled a new streamlining program including voluntary retirement for 500 employees in the coming few years. Most of the program will be implemented this year and estimates are that 300 employees will retire before the end of 2016.
The program will cost an estimated NIS 510 million of which NIS 60 million was already set aside in the first quarter of 2016 financial report. The cost of early retirement for each employee will be an average of NIS 1.02 million.
As part of the allowances program permitted by the Supervisor of Banks for financing voluntary retirement and streamlining programs, Israel Discount Bank will receive accounting allowances. NIS 200 million of the cost of the program will be recognized as a tax deductible expense for 2016.
The 300 employees taking early retirement this year will receive 265% of the compensation due to them. Employees aged 50 and over are eligible for the plan. A further 200 employees from the bank and subsidiaries such as Mercantile Discount Bank will take early retirement in the coming few years.
Israel Discount Bank has the weakest operational efficiency of Israel's five major banks.
Israel Discount Bank CEO Lilach Asher-Topilsky said, "Due to the challenges developing in the banking system and the trends and changes in the market as well as our success in the original strategic streamlining plan, we have decided to expand the streamlining plan and set ourselves an additional challenge. We are determined to stick to a strategic outline plan that will also facilitate the continued growth and success of the Discount Group in the future."
Israel Discount Bank is the second major bank to announce a voluntary retirement streamlining plan. Several months ago, Bank Leumi (TASE: LUMI) said it was giving early retirement to 700 employees.
Published by Globes [online], Israel business news - www.globes-online.com - on September 14, 2016
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