It's unprecedented. Supervisor of banks Roni Hizkiyahu last week blocked Bank Hapoalim from appointing its own choice of CEO. His move constituted an aggressive intervention, even a declaration of war. It shows just how worried Hizkiyahu is about the management of the bank.

Hapoalim had been considered the most dependable bank in Israel. Now it has become the one that most keeps the watchdog awake at night.

Two months ago Hizkiyahu visited Shari Arison, the bank's owner, telling her she had to handle Hapoalim's management problems, including the feuds at the top. Mainly, he was referring to Hapoalim's high-risk investments in mortgage-backed securities.

His main criticism was how those investments had been handled after the subprime meltdown had begun to roll. Despite Hizkiyahu's warnings, the bank's management - chairman Danny Dankner and CEO Zvi Ziv - failed to tackle the problem in time. Therefore, Hizkiyahu intervened in May 2008, forcing Hapoalim to sell its MBS at a loss of $1.3 billion. If Hapoalim hadn't been forced to sell, its loss would have been about $2.5 billion, at this time, and the bank's condition would have been far worse.

Later Hizkiyahu refused to allow Hapoalim to buy the controlling interests in banks in Ukraine and Russia, sparing the Israeli bank from more exposure to risk. Also, in the last year and a half, three of the bank's risk managers have been replaced, not to mention other high-ranking managers. Hizkiyahu isn't pleased about this churn at the top either. He presented all these concerns to Arison.

The result was that Arison and Dankner decided that Ziv should go home, a decision that came out of the blue, one day before Bank Hapoalim released its fourth-quarter and year-2008 financial statements. That's unprecedented, too. Even more astonishing, the board didn't thoroughly discuss the change at the top. It rubber-stamped the decision, asking no questions about why Ziv was leaving, and appointing Zion Keinan as successor without looking at alternatives. Hizkiyahu became even more worried.

Hizkiyahu would like a "total banker" to head Hapoalim, the kind with years of experience in risk management, who has already handled crises in credit and investments. That isn't Keinan. Nor does chairman Dankner come from banking, actually. Hapoalim would have a top team without balances. Ousting Ziv changed the situation for the worse, because Ziv was at least a real banker.

In normal times, Keinan could have spent some months learning the business. But this isn't the time for school. The business environment is full of shoals, debt arrangements for Israel's biggest companies are lurking and the bank is exposed to risk. So Hizkiyahu wrote to Dankner, demanding that Keinan's appointment be suspended until alternatives are located by a committee, or some other way, and the issue is thoroughly thought through. Hizkiyahu is also inquiring into the manner in which Ziv quit and Keinan was appointed.

In essence Hizkiyahu's message to Dankner and Arison is: I won't accept Zion Keinan. I want a banker.

But Dankner and Arison have dug in their heels.

Last week Hizkiyahu opened a front against one of the most powerful women in Israel's business scene, Arison. For the greater good of us all, we can only hope he wins.