Israel Discount Bank Gains on Cost-Cutting Bets: Tel Aviv MoverShoshanna Solomon
Israel Discount Bank Ltd. advanced to the highest level in more than two years on bets the departure of the labor union head will help the country’s least-efficient lender to cut costs.
The shares of the Tel Aviv-based bank increased 3 percent, the biggest gain since Sept. 1, to 6.93 shekels at the close in Israel. The benchmark TA-25 Index of stocks added 0.3 percent while the Tel Aviv Banking Index of the country’s five largest commercial lenders rose 1.2 percent.
Management recently informed union leader Riki Bachar it won’t extend his employment contract beyond March 2014, Globes reported yesterday after markets closed. Banks need to cut costs to cope with lower interest rates, tougher competition and higher capital requirements, Supervisor of Banks David Zaken said in a July interview with Bloomberg.
“This Globes report raises expectations for progress for a new union deal with hope for a more flexible new union leader,” Terence Klingman, head of research at Psagot Investment House Ltd. in Tel Aviv, said by phone.
Discount closed some branches for a half day on May 9 after unions announced a work dispute to demand higher salaries. Sarit Weiss, a spokeswoman for the bank, declined to comment when contacted by phone today.
Israel’s third-largest lender by assets has an efficiency ratio of 77 percent, according to data compiled by Bloomberg. Number-two Bank Leumi Le-Israel Ltd.’s quotient is 71 percent, while number-one Bank Hapoalim Ltd.’s is 62 percent, the data show.
Hapoalim executive Lilach Asher-Topilsky was named Discount’s new chief executive officer on Oct. 17, replacing Reuven Spiegel.