Zohar Bronfman 248.88.
(photo credit: Ariel Jerozolimski [file])
Israel Discount Bank chairman Shlomo Zohar has reached a compromise agreement with the the bank's controlling shareholders to step down before his contract ends.
"We have received a letter from Zohar in which he said that due to the circumstances that have arisen, he will cease to be chairman of the board from January 1 next year," Israel Discount Bank said in a statement Wednesday.
The Bronfman-Schron Group, the bank's controlling shareholders, said the decision to replace Zohar was due to internal organizational changes. A replacement for Zohar has not been announced. Former Finance Ministry director-general Yossi Bachar is said to be among the potential candidates for the post.
As part of the compromise agreement, Zohar will be employed as a financial adviser in Israel to Bronfman-Schron Group companies for another two years after he leaves his position.
Earlier this month, Zohar was asked by the Bronfman-Schron Group, which holds a 26-percent stake in the bank, to step down as chairman, without providing details on the reasoning.
Zohar's contract expires in February 2011, and until the compromise deal was reached, he had said he intended to stay in his position until the end of his term.
"I am not surprised about the agreement," Yuval Ben-Zeev, a banking analyst at Clal Finance Batucha, told The Jerusalem Post. "Zohar is very appreciated and has made an important contribution to the bank. But at the end of the day he did not have much of a choice, because the situation was starting to get out of hand.
"Learning from the experience of the ousting of the chairman at Bank Hapoalim, it was also in the interest of Discount Bank to settle this affair as quickly as possible. It is understandable that the investor public wants to know the reason for the ousting, but since the stability of the bank is not threatened, and the Bank of Israel has not raised any claims of misconduct or mismanagement, the details might remain behind closed doors."
In June, former Bank Hapoalim chairman Dan Dankner announced that he would step down, ending a two-month battle with regulators over what the Bank of Israel called flaws in management.
Over the last few days, Matthew Bronfman, of the Bronfman-Schron Group, met with the parties involved in the affair, including Supervisor of Banks Rony Hizkiyahu and Finance Ministry Accountant-General Shuki
"I have to come to Israel to deal with this issue and to come to a solution which is satisfactory to all sides involved and is in full accordance with proper conduct of corporate governance," Bronfman said, adding that he was committed to the bank and its future success.
Last week, Hizkiyahu said bank owners had every right to make management changes, but it is the central bank's role to thoroughly examine if the ousting and the reasoning is proper, even in a case of voluntary departure of a bank manager.
"We have not initiated any action against Bank Discount regarding the dissatisfaction from its management or the request to change management at the bank," Hizkiyahu said.
The Bronfman-Schron Group acquired a controlling stake in Discount Bank from the government in 2006 and appointed Zohar as its chairman.
In addition to its 25% stake in Discount Bank, the state also holds an 11% stake in Bank Leumi. The Finance Ministry plans to sell these stakes next year via the stock market.