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First International Bank of Israel may have reported a steep climb in profits for the second quarter yesterday, but the country's fifth largest bank still faces industrial unrest, despite agreeing Tuesday to pay bonuses to all its employees.

The bonus of 60 percent of a monthly salary was enough to return all the bank clerks to normal working relations yesterday, and their union ended its long-running dispute over the bonus for the bank's performance last year.

Yesterday, however, the computer staff of First International declared their own labor dispute, threatening to strike too.

The computer staffers informed management that their dispute centered on the bank's "ending all activities of the bank's computer division and outsourcing it to EDS."

The workers, employed on personal contracts, are not unionized or linked to the Histadrut labor federation. They say that the increasing use of EDS was made without any negotiations with them.

A bank spokesman said that all the computer staffers would be receiving bonuses "that could reach thousands of shekels per worker. EDS offered the workers improved conditions, such as accounting courses, some of them overseas, and offered company cars to 40 percent of the staff."

First International netted NIS 102 million in the second quarter, versus NIS 88 million in the parallel, the bank announced yesterday.

The bank, which is controlled by Zadik Bino, attributed the increase to Ubank, which it started to consolidate in its results in late 2004.

First-half return on equity reached 10 percent, up from 8 percent in the parallel. Second-quarter return on equity was even higher at 11.2 percent.

Provision for doubtful debt dropped slightly over a year ago to NIS 87 million, though it was up from the first quarter due to a single borrower; it didn't say who, but did say it wasn't Clubmarket.

Operating costs jumped 15.5 percent and salary costs were 10 percent higher at NIS 221 million.