All that glitters / The next head of Bank Leumi
Rakefet Russak-Aminoach is the candidate to beat, but she has one glaring disadvantage.
In the banking and business community, including among former directors of Bank Leumi itself, it's a no-brainer. Rakefet Russak-Aminoach, senior vice-president and head of the bank's business department, is practically a shoo-in to replace Galia Maor as chief executive of Leumi.
On the one hand, Russak-Aminoach is a hard-working, smart manager. As Maor's right-hand woman for years, she knows the bank and the state of its biggest borrowers. She has been at Leumi for seven years and knows which of its customers pose a problem. She also has the backing of the boss, Maor herself.
But Russak-Aminoach has one glaring disadvantage - at least from the perspective of image. She is rather too close to the tycoons. Russak-Aminoach is particularly close to Idan Ofer, controlling shareholder of The Israel Corporation, and therefore cannot handle his business dealings with the bank, even though Bank Leumi is not only a big lender to The Israel Corporation, it's also invested in the conglomerate. Every time the upper credit committee has convened to discuss any issue regarding the Ofer family, Russak-Aminoach has been replaced by the CEO, Galia Maor.
The thing is, Russak-Aminoach isn't close to just the one tycoon. She lives among them. She rubs shoulders with them socially as well. When you spend time on the yacht of one tycoon, you meet others as well.
That disadvantage, if such it is, does not rule her out for the top position at Leumi. For the bank's chairman, David Brodet, and the other members of the search committee convened to find a successor to Maor, Russak-Aminoach is the candidate with the least risks attached.
For the board of directors at Leumi, naming a new CEO is a huge pain, with the potential to cause a lot of trouble. If the candidate turns out to be a lemon, the chairman and directors will be the ones to take the blame.
After 16 years of absolute rule by Galia Maor, finding the right candidate is the most important decision the board has had to make in a while. A bad appointment will stain careers. This would explain why they would likely opt for the safest candidate, who is Russak-Aminoach.
What about the tycoons? Russak-Aminoach has coped with that problem pretty well for years. Maor was also a member of the 0.01% and has been known to argue that a person can't be judged just because of his friends.
The public aspect
But there is one problem: Picking Russak-Aminoach would mean the directors are focusing on their own personal good rather than the public and ethical message that the appointment would deliver.
Why? Because Bank Leumi is no ordinary bank. For the first time in Israeli history, it will shortly become the first big bank that isn't controlled by a controlling group. There's no daddy. All its shares will be held by the general public, as is the case with the big banks in America and Europe, but not here. Practical day-to-day control will be entirely in the hands of its management; no single owner will be calling any shots.
And this means that Russak-Aminoach would be CEO of Leumi and would also control the bank, which has a 29% share of the banking market in Israel.
This has a further implication. Since Leumi is the first to have no controlling shareholder, Russak-Aminoach's appointment delivers the message to the business and banking community that this is the sort of manager who should stand at the head of a big, public bank, of a big, public company.
This is why the Leumi directors should look beyond their own convenience and at the big picture. They should perhaps ask themselves certain questions of principle. What sort of character should be picked to head this experiment? What sort of character, and image, would help Leumi gain the trust of the general public, which actually owns the bank? And what are the main characteristics that the CEO, the person de facto controlling the bank, should present to the public?
In contrast to the present leaning of the board, arguably the most important characteristics are not deep familiarity with the bank, or the support of the outgoing CEO. They are integrity, modesty and absence of conflicts of interest, existing or potential.
If Bank Leumi is to become a bank wholly owned by the public, perhaps it should be led by a public figure who meets the same requirements demanded of judges, ministers, Knesset members and top officials, a person who minimizes his social and personal contacts with the rich.
Russak-Aminoach does not fit that profile. Look at the rash of haircuts (companies defaulting on their debt to bondholders ), and the fact that all too many bonds issued by tycoons are now considered junk bonds. The main job of Leumi's next CEO will be to manage these tycoons' debt. Is a person who spends her vacations with them, eats out with them and goes to their parties the right one to handle tough negotiations with them about repaying their debts to the bank?
I do not mean to criticize Russak-Aminoach in the slightest. She climbed the ladder in record time by virtue of her skills. She decided which social circles she prefers. Membership in the 0.01% club advanced her career and contributed to her status. No question, she is a model of emulation for many.
Russak-Aminoach claims, with cause, that all the bank CEOs attend the glittering events she attends, and that the gossip columns focus on her because she's a young woman. The other candidates to lead the bank, she says, also associate with the tycoons.
But on the eve of this great decision, which will happen in the next couple of weeks, the board should carefully consider the message it is delivering to Leumi's investors, customers and the entire business community. If it is true that Israel has not one single talented banker who isn't tied to the tycoons, then what's needed is to tear down the existing order and rebuild from scratch.