Heads are rolling at Israel Credit Cards-Cal Ltd. (ICC-Cal) (Visa), with the simultaneous replacement of three VPs. On Thursday, ICC-Cal's board of directors decided on fundamental changes in the company's functioning and on immediate personnel changes.
Israel Discount Bank (TASE: DSCT) owns 71.8% of ICC-Cal and First International Bank of Israel (TASE: FTIN1;FTIN5) owns 28.2%.
The board ousted VP marketing Ronen Galperin, VP risk management Ronit Fruchtman, and VP finance Shahar Sagiv.
ICC-Cal needs approval of the Bank of Israel to appoint new VPs. This approval is reportedly forthcoming, because the Bank of Israel is very worried about the goings-on at the credit card company. Last week, the Bank of Israel notified the company that it may not lower its capital adequacy ratio below 15% under Basel II - The New Basel Capital Accord of the Basel Committee on Banking Supervision) until further notice.
The reason for the unprecedented directive is that the Bank of Israel believes that ICC-Cal needs a "safety cushion against future losses and provisions until matters clarify… from the recent events at ICC-Cal and the failures in clearance discovered."
ICC-Cal is currently in the midst of two investigations. One is an internal probe by Discount Bank, and the other is an external probe by Adv. David Hodak, the head of GKH Law Offices. Sources believe that Hodak will be scathing and severe on ICC-Cal's executives.
A slew of flaws and failures in ICC-Cal's credit card clearing procedures were uncovered in the past several months, especially for high risk online food supplements and gambling charges.
Published by Globes [online], Israel business news - www.globes-online.com - on June 28, 2010
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