Israel’s Bank Salaries Higher than Salaries in Similar Economies

IsraelNews and Views

A bank is a place that will lend you money if you can prove that you don’t need it.
Bob Hope

I believe that banking institutions are more dangerous to our liberties than standing armies.
Thomas Jefferson

You know the scene in Mary Poppins where Jane and Michael cause a run on the bank because Michael refuses to deposit his tuppence there? (If you don’t, please hang your head in shame for a few seconds and run to your nearest video store to rent the movie.) Well, sometimes I wish that we could have some kind of symbolic run on the banks here that would force them to get their act together.

We are all at the mercy of the banks. There may be a whole bunch of them to choose from, but they’re all the same. Their charges are exorbitant, seemingly because they don’t know how to make money by investing our money like banks outside of Israel. So they charge us for the privilege of leaving our hard-earned cash there. But we shouldn’t be too hard on them – their excellent customer service is worth every penny. You look skeptical. Ok, but the executives who run the banks deserve to get a decent salary that is a zillion times the average Israeli salary for all their hard work, and who else will pay them if not us average Israelis?

Don’t get me wrong – I am not against people earning high salaries; it just irks me when I’m paying someone’s exorbitant salary and haven’t gotten much value in return. If a CEO leads his/her company to profits and success, the company is right to invest in compensating them for their efforts, and hopefully as a result motivate them to earn them more profits. Do our bank executives lead their companies to greater profits, thus justifying their bloated salaries? According to a new report published by the Bank Supervisor, the answer is…no.

This report shows that the salary level in Israel’s banks is higher than those in banks operating in markets that are similar to Israel’s, such as Belgium, Ireland and Poland. According to the report, the salary component as a percentage of the banks’ revenues is about 50% higher in Israel. Other salary inconsistencies:

  • While Israeli salaries grew by 3% in 2005, bank salaries grew by almost 11%
  • Bank expenses grew by 12%, but revenues only grew by 9.6%.

If these were real businesses with real shareholders and competition, someone would probably be protesting.

And now, an amazing but true story from a customer of one of our hallowed banks.

Dear Customer: You need a Foreign Currency Account for Every Country You Plan to Visit

An acquaintance received a letter from her bank, Bank Hapoalim, informing her that should she plan on taking any trips overseas, she must open an account for every currency of every country in which she plans to be.

She made a special trip to the bank to find out what exactly they were talking about, but when she got there the usual clerk who takes care of her account was not there. She went to speak to someone else, and was told that she had to talk to her clerk. She informed them that he wasn’t there. The clerk looked at the letter, looked at the woman’s account, and said yes, she needs to open foreign currency accounts for every currency she plans to use overseas.

This woman came back to the bank on a day when her usual clerk was present, and he told her that this letter was mistakenly sent to her. He said it was meant for clients with high levels of debt, but her bank account is fine and therefore it doesn’t apply. Understandably distraught, this woman informed her clerk that as a stable and long-time client, she believed she didn’t deserve this type of treatment. The clerk had no response, probably because no one at the bank ever told him anything about customer service.