Leumi Readying Plan to Slash 1,000 Jobs in Coming Year

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People walk past a branch of Bank Leumi in Tel Aviv in this February 18, 2009 file photo.
A file photo showing people walk past a branch of Bank Leumi in Tel Aviv.Credit: Reuters

Bank Leumi is preparing a program for voluntary layoffs amounting to more than 10% of its staff as Israeli lenders heed calls from the Bank of Israel to improve their operating efficiency.

Bloomberg News reported on Tuesday that Leumi, Israel’s second-largest lender, would seek voluntary redundancies from more than 1,000 of its workforce of approximately 12,500 people in the coming year and cut its head-count by another 100 annually over the next five years. All told, the cost of the program is likely to reach 500 million shekels ($129 million).

A preliminary plan has been filed with the Bank of Israel’s Supervisor of Banks Hedva Ber, Bloomberg said, citing an unidentified source. But Leumi’s workers’ committee said it was unaware of any layoff plan and would fight to ensure that no employees were pressured to resign.

“The Leumi workers’ committee won’t countenance any firings, not of a single employee, certainly not due to negligent management,” it said. “The workers' committee will only enable employees who want to leave to do so Beyond that, it is unfortunate that we are learning about the plan through the media before it’s been approved.”

A spokesman for the bank confirmed that it was in the process of putting together a “efficiency program” whose details have not been finalized. “All workforce reductions will be done in coordination with the workers’ committee,” it added.

Shares of Leumi were up less than 0.1% to close at 13.62 shekels in Tel Aviv Stock Exchange trading.

The Leumi plan comes after Ber ordered Israel’s banks last December to improve their cost structure, which is conventionally measured as costs to operating revenues. She has promised to ease capital adequacy ratio for the banks that undertake the most aggressive streamlining efforts.

Ber said the industry costs are too high relative to banks in other countries belonging to the Organization for Economic Cooperation and Development – an average of 70.2% in the years 2012-14 versus just 60% for OECD banks.

Among Israel’s five biggest banks, First International Bank – the smallest – has the highest relatively costs, amounting to 77.6% if income in the first quarter, followed by Israel Discount Bank with 77.1%.

At 74.1%, Leumi’s is next, but that is a much higher ratio than Bank Hapoalim and Mizrahi Tefahot Bank.

For a long time, Leumi lagged behind Hapoalim in trying to cut costs, adding 2,000 employment positions in the years 2005 to 2011 while Hapoalim added just 120. After Rakefet Russak-Aminoach became CEO in 2012, the bank reversed costs and cut more than 1,000 people from its payroll, but Hapoalim instituted even bigger reductions.

At the end of the first quarter, Leumi’s capital adequacy ratio was 9.96%, the highest among Israeli banks and close to the 10.2% it needs to reach under a Bank of Israel directive by the end of the year.

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