Legislation9/25/2026

How the Salary Cap Affects the Recruitment of Executives at Israeli Banks

Executives in Israel’s banking system are increasingly moving to non-bank companies in finance, investment, and real estate, where they can earn much more. Bankers link this trend, among other factors, to a 2016 law that capped the pay of executives at financial corporations.

Key facts

•The law was enacted in 2016
•The cap—a salary ratio of 1 to 35
•Tzachi Artzi: NIS 4.6 million a year
•Itamar Furman: NIS 5.6 million a year
•The five banks’ profits in 2025—NIS 32 billion
•There are no legal proceedings and no judgment

Why Executives Are Leaving the Banks

The head of Bank Leumi’s Construction and Real Estate Division, Tzachi Artzi, is expected to head the non-bank credit company Navi Group. His annual compensation cost will be NIS 4.6 million, including a NIS 600,000 signing bonus, while the compensation cost of Leumi CEO Hanan Friedman last year was NIS 4.4 million. Itamar Furman moved from Bank Hapoalim to Isracard, where his expected annual compensation, excluding a signing bonus, will be NIS 5.6 million, compared with the NIS 4.3 million received last year by Bank Hapoalim CEO Yadin Antebi.

How the Restriction Is Structured

According to the account in the source, the law enacted in 2016 caps the pay of executives at banks and insurance companies: it may not exceed 35 times the salary of the company’s lowest-paid employee. Banking system officials argue that this limits promotion and compensation opportunities not only for CEOs, but also for mid-level managers. In addition, banks find it more difficult to recruit senior outside experts because private companies can offer them higher pay.

Whether the Banks Were Harmed

A study by Dr. Meital Graham Rosen of the Bank of Israel Research Department, published about two years before the article, found no deterioration in the banks’ results or change in the risks they take following the salary cap. The five largest banks—Leumi, Hapoalim, Mizrahi-Tefahot, Discount, and First International—ended 2025 with a combined profit of NIS 32 billion. In the first half of 2026, their combined profit totaled NIS 16 billion.

The Dispute Over the Long-Term Effects

Critics of the law believe that its impact may yet become apparent: the banks are already having difficulty recruiting experts, especially in technology, and some activities are being transferred to subsidiaries where the salary cap does not apply. Former Supervisor of Banks Yair Avidan agrees that the provision distorts the market, but does not believe that serious harm to the banks’ ability to develop high-quality executives has been proven. The law does not prohibit movement between sectors, but the gap in permitted pay makes outside offers more attractive.

What this means for you

For bank customers, the law does not directly change the terms of accounts, loans, or deposits. Its practical significance is reflected in personnel policy: banks are restricted in the compensation they may pay executives and certain experts, while non-bank companies can offer more. However, the data presented so far do not indicate any deterioration in the financial results of the largest banks.

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