Discount Bank to Pay Up to $270,000 Per Employee in Mercantile Merger
Translated & summarized from N12 by baba
Discount Bank is set to spend at least 500 million shekels on severance packages for employees leaving Mercantile Bank as part of a merger. An estimated 400 to 550 employees will depart, potentially receiving one million shekels each. The merger, approved by both banks' boards, is expected to be completed by 2027, pending regulatory approvals. Analysts suggest the full benefits of the integration will take about three years to materialize.
The story in 6 lines · by baba
- Discount Bank will pay at least 500 million shekels in severance for Mercantile Bank employees leaving due to merger.
- Each departing Mercantile Bank employee is estimated to receive at least one million shekels.
- Between 400 and 550 of Mercantile Bank's 1,400 employees are expected to leave.
- The merger process is expected to be completed by 2027, pending regulatory approvals.
- Mercantile Bank will initially continue to operate as an independent brand.
- Discount Bank is currently the second least efficient bank in Israel.
Discount Bank is expected to pay between 500 and 600 million shekels (approximately $135-160 million) in severance packages to employees of Mercantile Bank who will leave as part of the merger. Market sources estimate that each departing employee could receive at least one million shekels (around $270,000).
The merger, which was approved by the boards of directors of both banks, is anticipated to be implemented during 2027, pending regulatory approval. The process is expected to take several years to complete. Approximately 400 to 550 of Mercantile Bank's 1,400 employees are projected to leave under a voluntary retirement plan, representing 30% to 40% of its workforce. Negotiations between Discount Bank, managed by Avi Levi, and Mercantile employees regarding severance terms have not yet begun.
Analysts at IBI, including Lior Shila, believe the true benefits of the merger will become apparent within three years. Shila noted that while the merger is positive and necessary for Discount Bank to become more efficient and digital, it is somewhat delayed. He pointed out that Discount Bank, currently the second least efficient bank in Israel, has the potential for significant improvement, especially with the advent of AI and digital solutions.
Mercantile Bank specializes in serving the Arab and Haredi sectors and is considered a more traditional bank with numerous branches. It also contributes significantly to Discount Bank's profitability. The combined entity will operate around 170 branches. Initially, Mercantile will continue to operate as an independent brand, with its branches serving customers without immediate changes, though about 30 Mercantile branches are located near existing Discount branches and are expected to be integrated.
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