discount bank officials.
(photo credit: Discount Bank press release)
Israel Discount Bank announced a new labor agreement Monday.
Yossi Bachar and CEO Reuven Spiegel signed the agreement with workers committee
chairman Rikki Bachar.
The agreement will come into effect next year. It
includes a substantial reduction in salary costs, amounting to tens of millions
of shekels, and, in the future, of hundreds of millions of shekels.
agreement is a breakthrough in labor relations at the bank,” said Spiegel. Yossi
Bachar added, “The agreement reflects a new spirit of cooperation.”
parties also agreed that, toward the end of 2011, there will be an early
retirement plan with increased severance compensation for 350-400 employees at a
cost of about NIS 1 million per employee. The bank will make a NIS 400 million
provision for the plan. Employees will also receive a one-time 6.5 percent pay
hike in January 2012 for 2011-12.
“We reached understandings with
management on the problems that concerned us. The agreements will enable us to
strengthen our home, Discount Bank, and to preserve our future as employees,”
said Rikki Bachar.
The agreement was signed after almost six months of
intensive negotiations between Yossi Bachar and Spiegel and Rikki Bachar aimed
at finding a stable long-term solution to the bank’s efficiency problem, which
is the worst in the banking system. In contrast to previous agreements at the
bank, which were accompanied by a ritual of labor sanctions, strikes, and
confrontations between management and employees until the final signing, in the
current agreement, the parties conducted themselves with openness and
Discount Bank estimates that the salary agreement will
result in NIS 160-180 million in savings in 2011-12. It expects the retirement
plan to achieve an additional NIS 100-150 million in savings in 2012. The bank
will make a provision for the plan, and it is believed that a third of the cost
will be posted to a capital fund and two-thirds will be in the profit and loss
statement and reduce the bank’s net profit for 2011 by NIS 160 million. This
will reduce the bank’s capital adequacy ratio by 0.25%, but the bank still
expects to meet its core capital adequacy ratio target of 7.5% by the end of the