Taking Stock / Questions for Zvi Ziv
Bank Hapoalim chief executive Zvi Ziv has not accepted any of Haaretz's many requests for an interview to discuss the proposed capital market and bank reforms. Via the bank's spokesman, Ziv said that he's rather write an article himself.
Here are some questions we would have liked to ask him, based on comments he has made in the past:
1. Mr. Ziv, you complain about the composition of the Bachar Committee, which you say was manned by "five or six regulators egging each other on." Do you think it should have been manned by five or six bankers reassuring one another?
You seem to imply that the officials from the Finance Ministry, the Antitrust Authority, the Bank of Israel, the Israel Securities Authority and the Justice Ministry don't understand enough about banking, competition and reforms, or are detached from reality and the market, so bankers should have been on the committee too.
If these bureaucrats are really so detached, why do bankers hasten to name them to top jobs as soon as they leave office? For instance, you hired former treasury official Shai Talmon as the most senior person in the bank after yourself.
If these bureaucrats really do live outside reality (until they move to the banks), how do you explain the fact that the manager of First International Bank of Israel, David Granot, who had been a member of the Bank Leumi board, and United Mizrahi Bank manager Eli Yones, who had been CEO of Bank Hapoalim, agree with the regulators that retail banking lacks competition and that only regulatory intervention can change the situation?
2. When you say the reform should be more "balanced," what do you mean? That a compromise, or balance, should be reached between the interests of 7 million Israeli citizens and that of 20 top bankers, who stand to lose some of their power?
3. When you say more "balance" is needed at the Knesset Finance Committee discussions, what do you mean exactly? We looked into the matter and found that while the bankers diligently appear at the committee debates every morning, tirelessly threatening and intimidating Knesset members, so far not one person representing bank customers has shown up. A cat got the Manufacturers Association's tongue, the Chambers of Commerce has been struck dumb, the organizations representing the self-employed are evidently busy elsewhere. Or maybe they all have good reasons not to go against the bankers.
4. You preach that the Bachar reform will needlessly shock the marketplace. Please explain exactly how dispersing the foci of power, how cropping conflicts of interest, how reducing the banks' enormous share of capital market operations constitutes "shock." While you're at it, perhaps you could explain how the banks, which provide 90 percent of all credit in Israel, contribute to financial stability, and how that was demonstrated in the 2002 crisis, when bank stocks fell 50 percent below their shareholders' equity and the Bank of Israel governor warned that a major bank could collapse.
5. You say, "If we don't get distribution fees from providers" - of financial instruments - "there will be no distribution," but how does that fit with the banks' statement that you are faithful to the interests of your customers? We customers thought the banks' advisers were suggesting the best possible instruments for our needs, not only ones that make money for you.
6. When you say a "consensus" reform must be reached, exactly whose consent should be obtained? Are you and Bank Leumi's Galia Maor the end of the list? Or should the forum be expanded to include, say, two or three bank customers and three or four taxpayers?
7. When you say the Bachar reform constitutes a danger to the economy, could you explain whether the danger is "clear and immediate"? The kind that should urge each and every last Israeli to extract every last shekel from the banks and put it into foreign banks, as some did three years ago when the true extent of the bad credit the banks granted to businesses became known? Or is the danger of the type that the late Hapoalim chief executive Amiram Sivan warned about, when the Brodet Committee forced the bank to sell some of its non-banking assets?
To this day, we remember Sivan's statement about it being "a black day for the economy." But we still don't understand what damage the Brodet Committee caused to Israel's economy.