Hapoalim CEO resigns in clash with chairman on strategy

Replacement Keinan is 30-year veteran who started at the bank as a teller.

By SHARON WROBEL
A Bank Hapoalim branch 248.88 (photo credit: Ariel Jerozolimski)
A Bank Hapoalim branch 248.88
(photo credit: Ariel Jerozolimski)
Zvi Ziv resigned on Wednesday as chief executive officer of Bank Hapoalim, the country's largest bank in terms of assets, over differences of opinion with chairman Dani Dankner. Ziv, 58, who has been CEO for five and a half years, announced his resignation 21 months before his contract expires. After 35 years at the bank, Ziv will step down by the end of the year. He will be replaced by his deputy, Zion Keinan, who is also head of corporate banking. Keinan is a 30-year Hapoalim veteran whose rise is something of a Cinderella story. The bank said on Wednesday that Keinan was the natural candidate for the position and that his retail banking strategy had emphatically proven itself. "I have decided to shorten my term of employment because of disagreements between myself and the chairman regarding the bank's future plans and ways to achieve its goals over the next few years," said Ziv in a statement just a day before the publication of the bank's fourth quarter results. Ziv formerly headed the bank's branch in Switzerland and served as the bank's retail banking head before taking over as CEO in 2003 from Eli Yones, who is now CEO of Bank Mizrahi Tefahot. Since the start of the global financial crisis, Bank Hapoalim has suffered great losses. Under Ziv's leadership last year, Bank Hapoalim ran up the largest subprime-related losses of any Israeli bank, forcing the bank to write off $1.5 billion and report its first annual loss in many years. On Thursday, the bank will release its fourth quarter and annual results. Analysts expect a quarterly loss of NIS 250 million, and a loss for 2008 as a whole of between NIS 590m. and NIS 750m. "The differences of opinion appear to have centered around the question of the bank's progress regarding short-term challenges as opposed to long-term challenges, and the timing of the implementation of future plans," said Yuval Ben-Zeev, head of research division at Clal Finance Brokerage. "In our understanding, Ziv was in favor of continuing the long-term strategic plans of the bank, while Dankner put emphasis on short-term challenges in light of the global financial crisis and recession in the Israel economy, and [wants] a slowdown in the implementation of future plans." Bank Hapoalim said that Keinan's decades of experience at the bank turned him into the natural replacement for Ziv. Keinan, 54, started his career at the bank 30 years ago as a teller, served in a number of managerial positions in the logistics and human resources division, and steadily worked his way up before joining the board in 2001. He was head of human resources and logistics from 2001 to 2003 before becoming head of retail banking from 2003 to 2007 and head of corporate banking thereafter. Keinan holds has a bachelor's degree in social sciences from the Open University and a master's in human resources development and organizational development from Tel Aviv University. "Over the past one and a half years, Keinan served as head of corporate banking. The question arises, though, whether he has enough experience in the credit sector - the most important experience necessary in a period of recession," Ben-Zeev said. Keinan clearly has the full backing of chairman Dankner, and the bank said on Wednesday that he was very highly regarded by the bank, its shareholders and its customers.