Bank of Israel: We may have saved Hapoalim

Intervention was necessary to secure stability, Hizkiyahu says.

Rony Hizkiyahu 248.88 (photo credit: Ariel Jerozolimski)
Rony Hizkiyahu 248.88
(photo credit: Ariel Jerozolimski)
The handling of the Bank Hapoalim affair, in which its chairman was forced to resign, saved the bank from the potential risk of instability, Supervisor of Banks Rony Hizkiyahu said Tuesday. "Our interest was to protect the stability of the bank and the public's savings," he said at a press conference in Jerusalem. "The handling of Bank Hapoalim saved the bank from any possible risk of instability, although it was never in a situation that threatened its stability." The resignation of Bank Hapoalim CEO Zvi Ziv in March was the catalyst for controversial power wrangling between Hizkiyahu, Bank of Israel Governor Stanley Fischer and Bank Hapoalim controlling shareholder Shari Arison. Ziv's announcement, which was triggered by disagreements with Hapoalim's chairman, Dan Dankner, over the bank's future, came just one day before the bank's 2008 financial report was released. Hizkiyahu fiercely criticized the way Hapoalim's board of directors had handled Ziv's resignation and its overnight decision to appoint his deputy, Zion Keinan, as his replacement. Hizkiyahu initially refused to approve Keinan's appointment and ordered the bank to appoint an executive search committee. "The process of the appointment of the new CEO broke all the rules of corporate governance," Hizkiyahu said. "We could not just sit there and do nothing. We felt that we needed to intervene and examine the way the bank's board of directors dealt with the departure of the CEO and his replacement." In addition, the central bank demanded that Dankner be ousted, which the beleaguered Arison finally agreed to do at the beginning of June. Arison says she was told we Dankner was forced to resign. She also handed numerous documents to State Comptroller Micha Lindenstrauss, complaining about Fischer's role. "If you ask whether Arison received information, the answer is yes," Hizkiyahu said. "If you ask whether she received all the information, the answer is no. We told her what we had to, and we reserved the right to apply censorship on what we disclose."