After only a year on the job, Bank Hapoalim CEO Eli Yones resigned yesterday after losing the confidence of the bank's American shareholders. They issued an ultimatum demanding his head or a change in management style, and the bank's board accepted his resignation at a meeting last night.
Yones, 52, a former accountant general at the Finance Ministry, replaced Amiram Sivan when he relinquished the helm of the country's largest bank in April 2002. As with his predecessor, Yones chose to leave amid press reports and rumors that could not have been made his job easier. "My resignation is a result of recent reports and the foul atmosphere between major shareholders and myself, making my continued position, in my view, untenable," Yones wrote in his letter of resignation.
Bank Hapoalim is controlled by three major groups who together hold around 45 percent of its shares. Arison Investments holds 20.74 percent, Israel Salt Industries (controlled by the Dankner family) owns 11.63 percent. The remaining control is split among four American investors - Leonard Abramson, Michael Steinhardt, the Shusterman family and Lewis Ranieri.
Dissatisfied by Yones' conduct, these 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.
Key stockholder Shari Arison reportedly gave the green light to oust Yones, say sources near the bank's management. Arison did not want anything to impair the harmony between the shareholders, she told associates. As the American shareholders wanted his head, she agreed to depose him to maintain good relations.
The dispute over management 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 a maximum allowance for problem debt, while the shareholders preferred to emulate Israel's other banks and set aside less. Ultimately Yones prevailed - setting aside a huge NIS 2 billion provision for the fourth quarter of 2002, raising the allowance for the year to NIS 3.3 billion - at the cost of his own 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 - a solo flier, who makes most of the decisions alone, without consulting the other managers.
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 it distribute dividends.
"The first dispute between the shareholders and Yones came when they refused to fully take his part after a public opposition arose to layoffs," said the source, referring to Bank Hapoalim's decision in late 2002 to fire 10 percent of its workforce - around 900 people. Ultimately the bank settled for dismissing about 100 less. Shari Arison's intervention in the matter, by calling a personal press conference and inviting Histadrut labor head Amir Peretz to breakfast to discuss the dismissals, were, say sources close to Yones, disruptive to the process.
Yones reportedly felt the shareholders had caved in to union pressure. CEO Yones had followed what he thought was the right path, to the shareholders' dissatisfaction, the source says.
Hapoalim's plan to dismiss 900 people spurred a wave of protests by the Histadrut and unions of the other banks, none of which had been consulted. The labor federation even took out ads personally attacking Shari Arison. The upshot was that the bank reached a compromise with the Histadrut, reducing the dismissals to 793. The arrangement was apparently reached directly between the shareholders and the Histadrut, overcoming Yones' opposition.
Yones will continue in his post until a date agreed with Hapoalim chair Shlomo Nehama. He will not leave empty-handed though, and is expected to receive a total compensation of NIS 5.7 million for his one year as CEO. According to his three-year contract, Yones is entitled to sizeable pay even if he leaves early of his own accord.
Hapoalim will now look for a replacement. Among the leading in-house candidates are the head of the retail division, Zvi Ziv, and head of the business division Shai Talmon.
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