The Bank of Israel has vetoed the Ministry of Finance's decision to sell the government's shares in Bank Leumi (TASE:LUMI) before the amendment to the Marani law is passed.
The Bank of Israel has previously agreed to the shares being sold before the amendment was passed but recently changed its position. The Bank of Israel's greatest concern is the formation of an informal controlling core comprising businesspeople with shares on Leumi who will seize control of the bank from below without any supervision or permit.
The amendment to the Marani law is designed to determine how the Bank of Israel will supervise a bank without a controlling core and how Leumi will operate without a controlling core. Consequently, the Bank of Israel has approached Accountant General Shuki Oren and asked him to delay the sale of the government's shares in Leumi until the legislation is complete.
The Bank of Israel is also concerned that after the shares are sold, the Ministry of Finance will not push for the law's amendment. One Bank of Israel source said, "The Treasury just wants a big check - and won't be interested in what happens to Bank Leumi after that."
Published by Globes, Israel business news - www.globes-online.com - on November 14, 2010
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