Hapoalim gets extension to reply to regulator

The Bank of Israel report rebuked Hapoalim's board and Chairman Dani Dankner for not establishing a search committee to choose a new CEO.

bank demonstrators 88 248 (photo credit: Ariel Jerozolimski)
bank demonstrators 88 248
(photo credit: Ariel Jerozolimski)
Bank Hapoalim Ltd.'s deadline to reply to a central bank report criticizing the board of directors and chairman of Israel's second-largest lender for acting improperly was extended by five days until May 11. The extension means that Monday's planned discussion between the board and controlling shareholder Shari Arison didn't take place, Hapoalim said in a statement on Monday. Arison and the board met briefly and will reschedule talks if necessary, it added. The board's own discussions were also postponed. The Bank of Israel report, released on April 30, rebuked Hapoalim's board and Chairman Dani Dankner for not establishing a search committee to choose a new chief executive officer and for taking less than an hour to discuss the resignation of Zvi Ziv and pick Zion Keinan as his replacement. The central bank also said Dankner was responsible for Ziv's resignation and inquired about disagreements between the two. Arison, who inherited most of her almost 26 percent stake in the bank from her late father, Carnival Corp. cruise ship magnate Ted Arison, has met with Bank of Israel Governor Stanley Fischer at least twice to discuss the report. Supervisor of Banks Rony Hizkiyahu froze the appointment of Keinan last month. Hundreds of Bank Hapoalim employees demonstrated on Monday outside the Bank of Israel's Jerusalem headquarters to protest the Supervisor of Bank's actions. The workers, dressed in white union T-shirts and red baseball caps, carried placards saying "Stanley, who is supervising the Supervisor?" and "Hizkiyahu, don't destroy our home." After months of negotiations, the bank's union reached an understanding with management that Hapoalim, which is planning some organizational changes, wouldn't fire any workers, union chairman Charlie Amzaleg said in letter to employees on Sunday. "The supervisor of bank's intention to make changes in the bank management, through aggressive intervention in the administration of the bank, raises real concerns that these understandings won't be carried out," Amzaleg said in the letter. While the Bank of Israel's actions are "highly unusual," they are likely to be motivated by concern over the manner in which decisions are being taken at Hapoalim, said Dan Galai, a professor at the Hebrew University of Jerusalem's School of Business. "The Bank of Israel must know more than they are saying." Galai said. "I can't remember anything similar to this in the past." Hapoalim has replaced three CEOs in seven years. Former CEO Eli Younes resigned a year into his tenure, saying disagreements with shareholders produced a "dismal atmosphere." His predecessor, Emanuel Sivan, was asked to retire early. Former Chairman Shlomo Nehama left in March 2007, and Amir Barnea was asked to leave the board by Dankner in September 2007.