Danny Dankner, Stanley Fischer hold secret meet
Bank Hapoalim Chairman Danny Dankner and Bank of Israel Governor Stanley Fischer, who is demanding that Hapoalim's controlling shareholder Shari Arison oust Dankner, met surreptitiously yesterday afternoon at the central bank in Jerusalem.
The meeting was apparently a short one, and ended without results.
Fischer and Dankner met beforehand at a capital markets conference in Tel Aviv. The two sat next to one another and addressed the conference consecutively (see picture).
Fischer did not comment in his address about the confrontation with Bank Hapoalim or Dankner.
Dankner, on the other hand, did talk about the issue and took the opportunity to complain about the assault against him.
The bank's board has taken biting criticism in the past week: Prof. Haim Levy, who has advised the bank's board in the past, described them as "marionettes."
Dankner criticized the depiction in his address and defended Arison.
"Shari Arison and her father left the U.S. nearly 20 years ago and returned to Israel," he said. "Over this time they have invested a billion shekels in Israel. The entire country is full of activities and buildings that she and her family donated and built.
"The board of Bank Hapoalim has excellent people, including professors and top-notch experienced bankers, lawyers and accountants," Dankner went on. "This is a board that made an extremely difficult decision and prevented huge damage to the bank. It is the height of audacity to call one of the best boards in the country a 'board of marionettes'."
Dankner also referred to his performance as chairman of Bank Hapoalim.
"I perform my duties professionally, devotedly and as a proud member of the Bank Hapoalim family. I hope that good judgment and responsibility will overcome the agitation and strife," he said.
Commenting on the global economic crisis, Dankner said that "In times of crisis, Murphy's law kicks into action, and anything that can go wrong does. So at the onset of the crisis we made the decision to write off a $300 million investment in risky instruments. At one time they said that our yields were low compared to global levels, and that we are too conservative. Nowadays 'conservative' has become a virtue.
"We knew when to execute a stop-loss [designated sell-off point] on an investment and strengthen and shore up our equity base on time. Our capital market is conservative as well, and has few toxic assets," Dankner added.
Two battles are taking place in parallel. Fischer demands that Dankner be ousted. Meanwhile, the supervisor of banks at the Bank of Israel, Roni Hizkiyahu, demands that the board withdraw its appointment of Zion Keinan as CEO in the stead of Zvi Ziv. The bank needs a search committee to find another chiev, or to suggest another acceptable alternative, says the watchdog.
Hizkiyahu published a critical report which found that the board had not acted in accordance with good banking governance.
On Tuesday Hapoalim's board responded to the report with an ultimatum: If Hizkiyahu refused to meet with the board, it would be unable to commission a search committee or propose other alternatives, the bank said.
Nevertheless, some of Hapoalim's external directors are said to have voiced objections to the final version of the board's response, and sought to comply with the watchdog's demand. Bank Hapoalim has declined to comment.
Hizkiyahu responded with an ultimatum of his own, which he relayed the same day in a letter to Bank Hapoalim. He unequivocally demanded to receive the detailed guidelines for the search committee by the morning of May 14.
The bank's board met yesterday to discuss Hizkiyahu's demand. One possibility is that the board will agree to the demand to commission a search committee, but will insist that not all of its members be external directors, and the controlling shareholder be represented.