Israeli Bank Executives Leave for Higher Pay in Private Sector

A growing number of senior executives are leaving major Israeli banks for lucrative positions in the non-banking financial sector, often earning significantly more than their former bank CEOs. This trend is fueled by the "Senior Executive Salary Law," enacted a decade ago, which caps compensation for top bank officials. For instance, Tzachi Artzi, head of real estate at Bank Leumi, will move to become CEO of Na'omi Group, earning an annual cost of NIS 4.6 million, surpassing Bank Leumi CEO Hanan Friedman's NIS 4.4 million last year.

Similarly, Itamar Foreman, former head of the business division at Bank Hapoalim, moved to Isracard with an expected salary of NIS 5.6 million, compared to his former CEO's NIS 4.3 million. Other notable moves include Eyal Ben Haim from Bank Leumi to Isracard, and Zoharit Yogev from Bank Leumi to Cal. This exodus raises questions about why banks, once stable employers, are now seen as talent incubators for other financial firms.

Former bank executives attribute the shift to increased opportunities in the broader financial world and a generational change in employee loyalty. They note that mid-level managers possess valuable business acumen gained from handling complex client issues at banks, making them attractive to external companies. The non-banking sector has expanded dramatically, creating demand for experienced personnel.

While some warned the salary cap would harm bank performance, research from the Bank of Israel suggests otherwise, finding no negative impact on bank performance or risk-taking. Despite executive departures, Israel's largest banks reported record profits in recent years, indicating resilience. However, concerns remain about the difficulty of attracting external talent due to salary limitations, with some banks moving tech divisions to subsidiaries to bypass these restrictions.