Israeli credit card company Isracard (TASE: ISCD) notified the Tel Aviv Stock Exchange this morning that the board of directors has approved a streamlining plan that includes laying off 250 employees, or 12% of the company's workforce. Isracard added that as part of the plan there will also be organizational changes, streamlining of procedures, a reduction in the number of units, and other adjustments.
Isracard estimates that implementing the plan will result in a one-time expenditure of NIS 30-35 million (before tax) for compensation of those employees who are leaving, which will be included in the company's 2022 financial results.
The layoffs come two weeks after Isracard signed a new operational agreement with Bank Hapoalim (TASE: POLI), which changed the terms of distribution between the parties regarding distribution of income from the activity of the credit cards issued by Isracard for the bank. As a result of the agreement, the bank's share of the revenue will increase, by an estimated NIS 50 million every quarter, for the next eight years, at the expense of Isracard.
Isracard says that approval of its streamlining plan represents another step in the implementation of the business strategy led by the company, to focus on the defined growth engines and focus resources on them, as part of the company's adaptation to challenges and changes in the market.
Isracard said, "The first fruits of the strategic plan are already visible on the ground, in the form of double-digit growth in credit portfolios for private customers and the business sector, a decrease in various operating expenses and a business focus. The streamlining plan is carried out in full cooperation with the workers committee while examining a variety of solutions and assistance programs for employees who will leave the company."
Isracard implemented a streamlining plan about two years ago that included voluntary early retirement of many employees. About 200-220 employees left including 120 who took voluntary early retirement.
Isracard CEO Ran Oz said, "In accordance with the group's strategy and developments in the competitive market in which we operate, we must make the company more flexible, efficient and focused so that we can give Isracard a significant competitive advantage and lead the market. Unfortunately, as part of this process, reducing the number of employees is a necessary reality."
Published by Globes, Israel business news - en.globes.co.il - on December 7, 2022.
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