Supervisor of Banks Rony Hizkiyahu is blocking the attempt to oust Bank of Jerusalem (TASE: JBNK) managing director Avi Bzura. The bank is controlled by the Shoval family, and the leading personality is director Gideon Shoval, the son of Zalman Shoval, the chairman of the bank's parent company Export Investment Corporation Ltd.
Hizkiyahu is demanding that the Bank of Jerusalem's controlling shareholders comply with the norms of corporate governance, and if they wish to exercise their ownership rights to remove the bank's managing director, they have to act accordingly. Export Investment Corporation owns 86.2% of the Bank of Jerusalem.
Several weeks ago, former Bank Hapoalim executive Uri Paz met with the controlling shareholders, and presented them with a concept for retail banking based on rapid growth by small bank branches. The Shovals were impressed, and they sought to hire Paz for the bank. The parties opened negotiations to give Paz an executive position at the Bank of Jerusalem.
Bzura, who is also a former Bank Hapoalim executive, was not notified about the talks with Paz.
Paz was first offered the position of executive vice chairman at the Bank of Jerusalem, a new job specially created for him. Later, when it was realized that in order to execute Paz's vision, he would need an executive position, Gideon Shoval decided to have Paz replace Bzura.
"We have here a serious problem of corporate governance. The controlling shareholders are acting improperly, and they will pay the price with the regulator," said a senior banker.
In response to Hizkiyahu's query, Bank of Jerusalem chairman Jonathan Irroni officially notified the bank's directors of the intention of appointing Paz to the bank.
In a notice to the Tel Aviv Stock Exchange (TASE) today, the Bank of Jerusalem said, "In view of the plan to expand the bank's activity, especially in retail banking, the board of directors will convene a special meeting to discuss the possibility of hiring Uri Paz for an executive position at bank, including the position of managing director."
The Bank of Jerusalem's share price rose 0.1% today to NIS 7.22, giving a market cap of NIS 508 million.
Published by Globes [online], Israel business news - www.globes-online.com - on February 24, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010