Mizrahi Tefahot agrees terms for Union Bank layoffs

Moshe Lari / Photo: Mizrahi Tefahot Spokesperson

Extensive streamlining was always part of the plan when Mizrahi Tefahot bought Union Bank of Israel last year.

Mizrahi Tefahot Bank (TASE:MZTF), headed by Moshe Lari, has completed the main stage of raising $600 million overseas in an offering of CoCo bonds, and has also announced that it has reached understandings with the employees of Union Bank of Israel on streamlining at the bank, which Mizrahi Tefahot acquired last year and which is now a subsidiary.

Mizrahi Tefahot has signed a special collective agreement with Union Bank and the Histadrut (General Federation of Labor in Israel) on severance terms for 340 tenured employees of Union Bank, almost half its 700 tenured workforce. The agreement will be implemented over a two year period.

At the end of 2020, Union Bank had 1,071 workers, about 700 of them tenured and 200 of them temporary workers, and the remainder people employed on personal contracts and technology workers. It is believed that a substantial proportion of the non-tenured staff will leave over the next two years.

For Mizrahi Tefahot the downsizing is essential, as it was a main part of the decision to acquire Union Bank.

The streamlining plan will cost Mizrahi Tefahot some NIS 400 million before tax (about NIS 263 million post tax), but it will be recorded as a balance sheet item against the deferred credit posted when Mizrahi Tefahot acquired Union Bank, and will not affect profit or the capital adequacy ratio in the consolidated financial statements for the first quarter of 2021.

Mizrahi Tefahot said that severance pay would be up to 200% of normal entitlements.

On the Coco bonds issue, the bank said that there was demand amounting to $2 billion from about 150 foreign financial institutions in the US, Europe and Asia. The offering is expected to be completed on April 7.

Published by Globes, Israel business news - en.globes.co.il - on March 25, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Moshe Lari / Photo: Mizrahi Tefahot Spokesperson
Moshe Lari / Photo: Mizrahi Tefahot Spokesperson
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