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All the 120 branches of Israel Discount Bank (TASE: DSCT), and the 70 branches of Mercantile Discount, have reopened today after the shutdown by management on Sunday.

The branches are reopening after last night the bank?s deputy CEO, Amnon Gideon, struck an agreement with the bank's combative union leader, Riki Bachar, and with the leader of the banks sector at the Histadrut labor federation, Zion Shema.

The parties agreed that the management drive to open 30 Bank Discount branches until 20:00 will remain in force. (Note that it is not the entire bank that remains open: but customers can receive services in the branches' vestibules, from workers staying late. Almost the entire range of bank services will be available at those times, but not all.)

However, the parties agreed, any time the management wants to open a new branch, division, or unit, it will require the approval of the union.

Moreover, the management agreed to shorten the working day on Fridays. The bank branches will close at 12:15 instead of 12:30.

The workers agreed to forgo any sanctions or disruptions for three months, until May 20. During that time the bank's management and labor representatives will be discussing the issues underlying the tensions between them at the bank.

On Sunday night the management announced a shutdown. Come Monday, all the outlets of Israel's third-biggest bank were shut, including branches of Mercantile Discount. The management move came one year after the bank was privatized.

Recently, the union representing the Bank Discount workers commenced sanctions, which included disrupting the main computer system. On Monday the management decided to exercise the article in the banking law that enables it to cease granting service, if continuing to operate could involve danger.  The management explained that continuing to operate the bank with only a skeleton staff could hurt the bank and its clients, hence the shutdown.

Not long ago, at the start of 2007, Bank Discount started a marketing drive that included leaving its branches open until 20:00. Shortly after, union leader Riki Bachar declared a labor dispute, and ordered the computer workers to commence sanctions.

Bachar claimed that the decision to extend working hours had been made without consulting the union. But sources at the bank surmised that Bachar may have been simply showing muscle ahead of negotiating a bonus for the year 2006, and a new collective employment agreement. Negotiations over the work agreement are scheduled to start next month.

Bank Discount has 5,500 employees. It is considered to be an inefficient bank, with low productivity per worker. One of the main reasons is that wage agreements are based on seniority. In the last year, the bank has commenced several voluntary retirement schemes for costly older workers, at a cost of hundreds of millions of shekels.

The new owners have ordered management to make the bank more efficient. That means changing employment arrangements. At this stage, the union objects to the management suggestions.