Governor of the Bank of Israel Stanley Fischer was provoked into public comment about the standoff with Bank Hapoalim (TASE: POLI; LSE:80OA)at today's Knesset Economic Affairs Committee meeting. MK Sheli Yacimovich (Labor) raised the issue despite a promise by new committee chairman MK Ofir Akonis (Likud) not to discuss it.
Fischer told the committee, "It's a mistake to discuss this matter. We're still in the middle of the measures. I can assure you that we would not have embarked on this path without considering everything, every repercussion, in the middle of the greatest financial crisis this country has every known.
"We concluded that we had to do this. There are two ways dealing with it. One is the formal side, and that can take a long time. We wanted to deal with it quietly, as in any other country. Usually, this kind of thing is done quietly, and people are given an oppportunity to leave honorably. We haven't started taking formal steps."
Fischer added, "Our intention is to preserve and strengthen the stability of Israel's banks, and no less important, strengthen the management of Bank Hapoalim. Our second objective is to boost the public's confidence in the banking system."
Concerning the Bank of Israel's demand for the removal of Bank Hapoalim chairman Dan Dankner, Fischer noted, "It is true that this matter has become a public issue, which is problematic. The authority of the Supervisor of Banks is the key issue here, and we entered the global crisis in a much better condition than other countries thanks to his strict and determined oversight.
"This is why, in our opinion, there is no risk of a bank collapse. The supervisor did not let the banks reduce their capital adequacy ratios, which is why our situation is much better than the rest of the world. It is thanks to Rony Hizkiyahu. If someone wants to weaken his authority, that will damage the Israeli economy, the Israeli banking system, and the public's deposits. We must not let, and I will not permit, anyone to weaken the authority and responsibility of the supervisor. It is not acceptable to hear polite requests by the supervisor to take certain actions and launch a public argument. Will that happen every time that the supervisor asks for something? We'll hold a public debate every time that the supervisor demands something? That's not how to supervise the banks."
Yacimovich launched a direct attack on Bank Hapoalim controlling shareholder Shari Arison, saying, "It's important that this committee make a clear announcement of support for Governor of the Bank of Israel Prof. Stanley Fischer and Supervisor of Banks Rony Hizkiyahu for their diligent action in the matter of Bank Hapoalim. These actions are as necessary for the economy as oxygen to breathe, and we will defend the supervisor and the regulator."
Yacimovich continued, "I call on Shari Arison to reach a quick and simple agreement with the Bank of Israel, and immediately do what the governor and supervisor of banks are asking her to do. There seems to be an impression that she doesn’t really grasp what she is being asked to do. Arison should thank the governor that Bank Hapoalim still exists. If we had to compare Arison and Dan Dankner's considerations against the considerations of Fischer and Hizkiyahu, I am sure that there would be no great hesitation here about who to support. It's important to remember that we don’t work for Arison."
Published by Globes [online], Israel business news - www.globes-online.com - on May 6, 2009
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