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Israel Discount Bank's chairman of the board, Arie Mientkavich, suffered two bitter defeats this week, both on his own turfs: law and regulation. The legal blow was landed by the Safra family, which concluded the sale of the controling interest in FIBI Holdings (which controls the First International Bank of Israel) to Zadik Bino and the Lieberman family. After a brief legal proceeding, the court rejected Discount's claim of right of first refusal, and even ordered Discount to pay NIS 315,000 in legal fees.

The regulatory blow came from Supervisor of Banks Yoav Lehman, who demanded the bank write down the value of its holding in FIBI. For months, Discount has been trying to avoid any write-offs, latching onto the valuation of Prof. Yoram Eden, who said that FIBI's value was the same as its equity.

However, Lehman was not oblivious to the Safra-Bino deal, which put a price tag on FIBI at 50 percent of its equity. Lehman therefore decided yesterday that Discount must write down the value of its holding in FIBI by NIS 178 million. Lehman thus enforced a valuation that is 80 percent of the bank's equity.

The defeat dealt by Safra goes with the territory; Mientkavich was trying to uphold the interests of the bank and its shareholders, and lost. It happens. Discount may have known full well that even it were to win the lawsuit, this did not mean the bank could instantly buy FIBI, but although Discount realized there would be obstacles that would prevent the deal from going through, the bank could have still benefited by selling its rights to a third party.

On the other hand, the campaign against the supervisor of the banks is no source of pride for Discount and its executives. First, there is no reason why dozens of Israeli corporations can write down the value of their assets in line with Standard 15 and Discount should be exempt.

Mientkavich, who is one of the founders of the Israeli Accounting Standards Institute, which drafted the new standard, should have been the first to adopt it.

Second, maintaining FIBI's current, high book value, reflects utter disregard for the the radical change in FIBI's situation over the last few years.

Third, Discount has put itself in a very hard spot if the supervisor of banks has to make its decisions for it. Such intervention means that the supervisor seriously questions the bank's own management, and this could cast doubt on other decisions that the bank's board and management may adopt.

The situation is awkward not only for Discount but also for the supervisor of the banks, who suddenly found himself competing with assessors like Prof. Amir Barnea and Prof. Yoram Eden.

Now that Lehman has started evaluating banks, it will be interesting to see the price tag he will put on Discount.