Behind all the pleasant words about postponing the privatization of Bank Leumi (TASE: LUMI) in order to maintain its stability is a different need: the need of Prime Minister Benjamin Netanyahu and Minister of Finance Yuval Steinitz to determine the identity of the bank's next chairman.
The Bank of Israel has already made it clear that, as far as it is concerned, there is no reason not to privatize Bank Leumi simultaneously with, or even before, approving the "Marani Law" amendment to the Banking Ordinance. However, the politicians find it convenient to use passage of the amendment as an excuse to wait.
Has one ever seen a politician eschew the chance of making an important appointment?
The job of Bank Leumi chairman is a prize. It is a position of power, influence, personal status, as well as rich material perks. Let us not be mistaken; although the person who will get the job will only hold for an interim period until the privatization is complete, and the new controlling shareholders will appoint their own man to the job, the process of privatization and consolidation of a controlling core could take years.
This is why so many candidates are running around Netanyahu and his wife, Sarah, for the job. Some of these persons are candidates only in their own mind, others are more serious candidates, and everyone is lobbying to get the job. A lot of names have been mentioned in the rumor mill: former Israel Securities Authority chairman Moshe Tery, National Economics Council chairman Ori Yogev, and Netanyahu associate Izzy Tapuchi, are among them. More than one person claims to have Netanyahu's promise for the job.
The latest name mentioned for the job is Jacob Frenkel, who is being called the breaker. His appointment has many advantages: he is presentable and well within the consensus as a former governor of the Bank of Israel. No one doubts his qualifications for the job (and no one mentions out loud the failure of his tenure as vice chairman of American International Group Inc. (NYSE: AIG) or the fiasco of his tenure as chairman at Lumenis Ltd.)
Frenkel also solves Netanyahu's problem vis-a-vis the other candidates. Frenkel's advantage is so great that none of the other candidates will be insulted at losing out to him.
Frenkel's appointment is aimed at solving, at least according to certain people in Jerusalem, the problem of Bank Leumi president and CEO Galia Maor. She would not turn down the job of chairwoman of the bank, if it were offered her, but there is great fear in Jerusalem of her response if someone is parachuted over her head to replace current chairman, Eitan Raff.
The fear is that an appointment that is not acceptable to Maor could cause her to quit. Frenkel solves this problem. He has seniority over Maor and was governor of the Bank of Israel when she was still a VP at the bank. It is thought that she will agree to work with him.
There are, of course, an other option, even very good one: keep Raff on. But what profit would the politicians make from this?
Published by Globes [online], Israel business news - www.globes-online.com - on November 22, 2009
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