After only a year on the job, the CEO of Bank Hapoalim (TASE: POLI), Eli Yones, resigned Sunday after losing the confidence of some of the bank's shareholders.
His resignation followed an ultimatum from the bank's American shareholders, who demanded his head or a change in management style, which they felt failed to comply with the shareholders' best interests.
Key stockholder Shari Arison reportedly gave the green light to oust Yones, say sources near the bank's management.
Arison does not want anything to impair the harmony between the shareholders, she told associates. As the American shareholders wanted his head, she has agreed to his deposal, in order to maintain good relations.
Dissatisfied by Yones' conduct, the shareholders were reluctant to dismiss him, but expected him to resign. Their ire was mainly over his efforts to block their intervention in the bank's management.
The dispute grew rancorous over the issue of provision for doubtful debt for the fourth quarter of 2002 and for the year. Yones supported a thorough "cleaning of the stables" and maximum allowance for problem debt, while the shareholders preferred to emulate Israel's other banks and set aside less. Ultimately Yones prevailed, at the cost of his job.
"The shareholders were dissatisfied with Yones' performance in managing the bank even before the affair of the provisions arose," said a source near Hapoalim's management. "Nor does the management particularly admire Yones, who's considered a soloist, making most of the decisions alone, without consulting the other managers.
"The first dispute between the shareholders and Yones came to light when they refused to fully take his part after a public opposition arose to the layoffs," said the source, referring to Bank Hapoalim's decision in late 2002 to fire 10 percent of its workforce, or around 800 people. Ultimately the bank settled for dismissing about 100 less. "As things stage, if dignity plays a part in Yones' considerations, he'll have to announce his resignation himself."
The source does not believe the shareholders will kick Yones out unilaterally. In any case, they have no substitute for him, the source said, adding that a year ago – when Yones took over the helm – the position had been offered to Shai Talmon.
Talmon refused the position on the grounds that he had just left the treasury, but he would now be considered an appropriate candidate, the source added, if Yones took the initiative and quit over his inability to command the shareholders' full support.
While Yones did good things as the bank's chief executive, the source said, he may have acted against the shareholders' interest. All the shareholders want is two things: that the bank's share price climb, and that the bank distribute dividends. If anything, Shai Talmon might prove even tougher on these matters than Yones, the source said.
For the fourth quarter of 2002, Yones pushed through a decision to set aside a huge NIS 2 billion for doubtful debt, lifting the allowance for the year to NIS 3.3 billion.
Want to enjoy 'Zen' reading - with no ads and just the article? Subscribe todaySubscribe now