Up to a few weeks ago, Ra'anan Cohen was considered a lucky soul who knew when to jump off the rolling wheel of the Labor Party and into a plum job with good perks. His colleagues said with envy: He certainly knows how to use his political contacts at the right time.
But today, Cohen hurries to declare, "I had no idea about the bank's situation" and we surely believe him.
The problem is not that he knew nothing about the Industrial Development Bank, but that he knew nothing about banking at all. But since when do knowledge and experience count in the field of jobs for the political boys? Now Cohen is attempting to win a few moments of grace as bank chairman. Yesterday he said: "It is not true that the Industrial Development Bank has closed. We will continue to accept new deposits... and only at the end of five months will it be decided whether to sell the bank's credit portfolio. If no buyer is found for the portfolio, then the bank will continue to operate. The depositors can feel completely secure."
That's all we need, Cohen talking about depositors' security. These are the very words that will drive out the last of the bank's depositors because there is nothing more terrifying than a politician's word of assurance. Everyone also knows that the bank stood on the brink of collapse when the pace of big depositors withdrawing their money just grew and grew, as soon as they understood that if they didn't take their money out now, tomorrow will be too late.
Cohen should also know that everything in the bank's credit portfolio can be sold - the question is just at what price? If the price is low enough, a buyer can be found, and that apparently is what will happen: a very low price that reflects the appalling management in the bank's previous line-up: CEO Yehoshua Ichilov and chairman of the board Shlomo Borochov (Natan Sharansky's political appointee). These two brought the bank to the current situation of virtual bankruptcy, by granting particularly large and irresponsible loans to industrial and telecoms concerns such as Peled-Givony and Gad Zeevi. At the same time they ran the bank with the highest wages and most generous work conditions in the banking sector, so that the collapse was assured. It is now necessary to check the retirement packages that these two received. Are they justified?
The basic reason for the crash is embedded in the strange ownership of the bank. About half of the control is held by the government and the other half is with the big banks. But it is the state that puts up most of the capital, so that the big banks didn't care who was given credit, and the bank became a serial loss-maker and a place of "work" for politicians and old hands from the large banks.
At the end of the troubles, the Bank of Israel will have to supply guarantees for the monies deposited with the sick bank, exactly as it did with the Trade Bank (with 95-100 percent of deposits covered, depending on the size of the deposit). In the end, the state will lose billions of shekels in addition to the many billions it invested in capital and deposits. And who is this "state" if not the taxpayers?
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