Israeli Banks Petition High Court Against Pay Cap

Many top executives may resign after law comes into effect in October, so as not to loose their pensions.

Tomer Appelbaum

The Association of Banks in Israel petitioned to the High Court of Justice on Wednesday the law capping pay for financial service executives, after failing to win clarification on how the law will affect pension benefits.

The banks had sought clarification on the issue, but as of Wednesday neither Finance Minister Moshe Kahlon nor Banks Supervisor Hedva Ber had offered any.

The law, which the Knesset approved in March, is due to go into effect in October. If officials have not by then ruled that pension rights are not affected, a spate of resignations by senior managers is expected and Bank Hapoalim’s incoming CEO, Ari Pinto, may opt not to fill the post and risk pension money totaling 10 million shekels ($2.6 million) due him.

The court said the government had until June 19 to respond and that it will hold its first hearing on the matter at the end of the month.