Discount Bank Merger with Mercantile to Cost Up to 600 Million Shekels
Translated & summarized from Channel 9 by baba
Discount Bank's merger with Mercantile Bank is expected to cost between 500 and 600 million shekels, largely for severance packages for 400 to 550 laid-off employees. The merger, approved by both banks' boards, is set to begin in 2027 after regulatory approval and will take several years to complete. The goal is to improve Discount Bank's efficiency, which lags behind competitors. Mercantile Bank will maintain its brand and the combined entity will operate about 170 branches.
The story in 6 lines · by baba
- The merger of Mercantile Bank with Discount Bank is estimated to cost 500-600 million shekels.
- Between 400 and 550 employees, or 30-40% of Mercantile's staff, are expected to be laid off.
- Each departing employee will receive at least 1 million shekels in compensation.
- The merger process is expected to start in 2027 and take several years to complete.
- The consolidation aims to improve Discount Bank's operational efficiency.
- Mercantile Bank will continue to operate under its own brand after the merger.
The merger of Mercantile Bank with Discount Bank is projected to cost the banking group between 500 and 600 million shekels, primarily due to employee severance packages. Mercantile Bank employs approximately 1,400 individuals, and the bank plans to lay off between 400 and 550 employees, representing 30% to 40% of its workforce. Each departing employee is expected to receive a minimum compensation of 1 million shekels, according to Mako. Negotiations between Mercantile Bank's management, led by Avi Levi, and its employees have not yet begun, making these figures estimates.
The boards of directors for both Discount and Mercantile banks recently approved the merger. The integration process is slated to commence in 2027, pending regulatory approvals, and is expected to take several years to fully complete. Banking analyst Lior Shilo of IBI anticipates that the tangible benefits of the merger will become apparent in about three years, noting that the process itself is lengthy.
This consolidation aims to improve Discount Bank's efficiency, which currently ranks second to last among Israeli banks, ahead only of International Bank. Discount Bank's efficiency ratio stands at 44%, significantly higher than Leumi's ratio of less than 25%. Shilo suggests that while Discount Bank has the capacity to enhance its performance, it has prioritized market share growth in recent years. He advises the bank to focus on efficiency improvements and adopt a more streamlined operational model, leveraging artificial intelligence, stating that the move is positive but perhaps overdue.
Mercantile Bank primarily serves the Arab and ultra-Orthodox sectors and operates a relatively large branch network. Following the merger, Discount-Mercantile will operate around 170 branches, comparable to Leumi and Hapoalim, which are larger institutions. Approximately 30 of Mercantile's over 70 branches are located near Discount branches and are slated for integration. Mercantile Bank will continue to operate under its own brand.
Mentioned
The same event, reported separately by each outlet. Open a few to compare what different newsrooms emphasize — and what they leave out.
Centre 1Other 1
Not the same event — other stories that share this one’s people, places, or theme: background, reactions, and follow-ups.
