The Bank of Israel Banking Supervision Department and the Israel Securities Authority will not intervene in, nor examine the decision to end Bank Hapoalim (LSE: BKHD; TASE: POLI) chairman Shlomo Nehama's term of office, unless they receive a complaint to that effect. In the absence of any complaint, the directive giving the controlling shareholder the power to appoint a chairman remains valid.
In keeping with due process, the Banking Supervision Department is examining the candidacy of Poalim Capital Markets - Investment Bank Ltd. chairman Dan Dankner for the Bank Hapoalim chairmanship and Irit Izakson for the deputy chairmanship. However, the supervisor of banks has not yet approved the sale of the Israel Salt Industries Ltd. (TASE:SALT) stake in the bank to Arison Holdings Ltd., and Dankner will be unable to take up his new post until such time as the sale is approved.
Last Thursday Arison Holdings announced that it had received a permit from the Bank of Israel to acquire the stake held by US shareholders in the bank's controlling interest. One of the conditions for the permit is the increase in the number of external directors on the bank's board to seven from five, and giving them a bigger role in the bank's audit and executive remuneration committees.
Last Thursday, the board was summoned to an urgent meeting at which it was notified of the decision to end Nehama's term of office. Nehama said that the arrangement had been agreed mutually. None of the directors made any comment, save for external director Prof. Amir Barnea who said that he could not understand what need there was to call an immediate meeting, adding that he suspected that this was a case of a personal whim on the part of controlling shareholder Shari Arison, and that the decision had been taken in the heat of the moment. He also wondered why the board had not been informed of the proceedings of a routine meeting on Wednesday afternoon which soured relations between Nehama and Arison.
Barnea asked Nehama whether there had been any disagreement over the management of the bank, whether there were any disagreements with the controlling shareholder, and why, after both sides had praised the management of the bank and stated that Nehama would serve out his full term through 2009, everything suddenly changed. Nehama did not answer Barnea's questions, and none of the other board members supported his criticism.
The Banking Supervision Department will study the minutes of the meeting last Thursday and if these give rise to doubts, the department will ask the bank and its controlling shareholders for explanations. The Securities Authority will simultaneously conduct an examination of its own, but it will treat the event as one that took place during a regular business day.
Published by Globes [online], Israel business news - www.globes.co.il - on March 18, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007