www.bethelfinance.com
Psagot Investment House Ltd. will fires scores of employees as part of its measures to deal with the mandated reduction in management fees in the pension savings market. The company, run by CEO Ronen Tov, has 800 employees.
Last week, the Ministry of Finance reached a compromise with Knesset Labor, Welfare and Health Committee chairman MK Haim Katz (Likud) to cap management fees on provident and severance funds and managers insurance to 1.05% of the accumulation and 4% of deposits, beginning in 2014. Most of the reductions will come into effect in 2013.
Capital market sources believe that investment houses will respond to the reduction by firing employees and other cost-cutting measures. Supervisor of Capital Markets, Insurance and Savings Prof. Oded Sarig says that investment houses will have to streamline. The aggregate market cap of publicly-traded insurance companies has fallen by NIS 1.3 billion since the reduction in management fees was announced.
Psagot's average management fee is currently 1.06%, and the capping of fees below this level will reduce its revenue and affect its value. Last week, its controlling shareholder, Apax Partners reportedly wrote down the value of the holding by 45% to NIS 2 billion from its previous valuation of NIS 2.7 billion made in November 2010. A few weeks ago, Apax Israel CEO Zehavit Cohen estimated Psagot's value at NIS 3.67 billion.
Psagot declined to comment on the report.
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