The Perfect Banker Who Made the People Loathe Bank Leumi

Rakefet Russak-Aminoach climbed the ladder nimbly, never putting a foot wrong - until this month. Her mistake could even reignite the social protests.

Asher Schechter
Asher Schechter
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Asher Schechter
Asher Schechter

Rakefet Russak-Aminoach has always done everything right. Young and ambitious, she began 20 years ago as a minion of the CEO of Bank Leumi and climbed to the top of the Israeli banking world on sheer talent, ambition and drive. Her talents as a consummate banker were acknowledged far and wide. And this month, a thing happened.

The trouble started two weeks ago with reports that the bank she runs, Leumi, had agreed to write NIS 150 million off debt owed by Nochi Dankner, the controlling shareholder of the biggest holdings group in Israel, IDB, to help him stave off bankruptcy or a firesale of assets.

And thus after 11 smooth months as CEO of Israel's second-biggest bank, Russak-Aminoach was all over the headlines. The outcry at the tender treatment of this Israeli tycoon living the life of Riley while everyman would find himself out in the street if he didn't repay the bank, rang to the skies.

Social networks flared up, not least because Dankner isn't just one of Israel's biggest businessmen (and under investigation for stock manipulation to boot), he's also Russak-Aminoach's friend. They move in the same social circles. They attend the same parties.

However pure her intentions, and arguably forgiving that debt is better for the bank than dismantling his businesses – appearances matter too, and her decision did not go over well.

And for once the public pressure had an outcome. Effectively, Nochi Dankner is losing control of his business group.

A strongman stumbles

For years, Dankner was the strongman of the Israeli business world. The conglomerate he runs, IDB, owns Israel's biggest cellular operator, supermarket chain, as well as a monopolistic cement maker and insurance company, to name but a tiny portion of its assets.

To most Israelis, Dankner represents everything that is wrong with our economic system, though to be sure, he didn't invent the wheel. He is seen as the epitome of crony capitalism: a heavily leveraged tycoon who rose to the top thanks not to business acumen but to friendships with people who mattered. Friendships, for example, with bankers like Russak-Aminoach.

During the social-justice protests in 2011, Dankner came to emblemize the fat cat partying on and trotting the globe in a private jet while Israelis struggle to make ends meet. To many he came to symbolize "hashita" - "The Method", meaning the common belief that in order to make it in Israeli business or politics you don't need to be smart, just to have the right friends in the right places, and – never to invest one's own money. No! investments should be made using money borrowed from provident and mutual funds and pension funds, i.e., widows and orphans, and Ricky Cohen from Hadera.

Which is what Dankner did: He borrowed billions from the public (and banks), and now he can’t pay it back, at least not in time. He wants the Israeli public to give him a break. Leumi, for one, agreed.

How did Russak-Aminoach, the consummate banker, err so grandly, triggering such a politically sensitive nerve? Her mistake had the potential to reawaken Israel's social protests, with Bank Leumi cast as the primary villain this time around.

So far Facebook groups with thousands of views have sprouted up calling on Israelis to close their accounts with Bank Leumi. Other pages pledge protests outside Leumi branches. Still more circulated a now-famous photo of Dankner and Russak-Aminoach, back when she was just the head of Leumi's business division, having lunch together and looking mighty friendly. Many saw this as more evidence that in Israel there are two classes of people, high-flyers and hoi polloi.

After a few days of being slimed with mud, Leumi capitulated and "froze" the arrangement with Dankner.

The harder the fall

To appreciate the magnitude of Russak-Aminoach's misstep, let's revisit her extraordinary career, studded throughout with the marks of excellence.

Born in the premium north Tel Aviv neighborhood of Ramat Aviv, she was a middle child. She showed an impeccable work ethic, was a prodigious student and early on demonstrated a passion for finance.

By 21, she had already completed her B.A. in economics, cum laude, and was lecturing on accounting.

After completing her MBA and mandatory military service, Russak-Aminoach went to work as Maor's personal assistant.

Maor, the grande dame of Israeli banking, was deputy chief of Leumi at the time. Within a year Maor got the top job, and recognized something special in her protege, the young Russak-Aminoach.

In 1995, Russak-Aminoach left the bank and joined a major accounting firm. Within five years, at only 34, she was running it. In 2004 she returned to Leumi and was appointed the head of the bank's business division, its main profit driver. She was 38 – the youngest board member in the history of the bank.

Many of her peers at the time felt threatened by her meteoric rise, as well they should have. She was clearly destined for great things.

Despite a cold reception from several high-ranking executives in Leumi, who were insulted by the appointment of young, untested outsider to one of the most lucrative jobs in Israeli banking, Russak-Aminoach proved to be a formidable manager. She shaped her division into one of the most profitable at Leumi and led a risk-averse approach that helped the bank emerge from the financial crisis practically unscathed.

Her career has not been entirely devoid of controversies, though. Always the supreme networker, she is a frequent attendee of high-class social events, where she mingles with some of her favorite clients. In August 2009 she attended the lavish wedding of Israel Corp.'s Idan Ofer, a very close friend and one of Leumi's biggest clients. She and her husband flew on Ofer's dime to the Greek Island of Mykonos for the occasion – causing outrage in Israel, for the same reasons Russak-Aminoach is taking it on the chin now.

Over the years she's been repeatedly criticized for her close relations with some of Israel's wealthiest businessmen and businesswomen, yet she continued her ascension and in 2011, was named Maor's deputy. In 2012, when Maor retired, Russak-Aminoach came into her own.

But the higher the rise, the harder the fall, they say. She rose to the top of Leumi like a meteor, but perhaps the scandal enveloping the bank now suggests she got there too quickly for her own good.

She was always known to be an excellent banker. That there is the problem: She remained an excellent banker but didn't learn to balance the right thing for the bank with the right thing, period.

Banking-wise, it might well have been the best choice to allow Dankner to repay only part of his debts instead of having him file for bankruptcy protection and get nothing back. From a publicity standpoint, however, it was a disaster.

Russak-Aminoach is ambition personified. She probably did everything right in the banking sense of the ordeal, but what she didn't realize was that she's no longer in the arena of professional banking. As CEO of the largest bank in Israel, she has to answer to the public, not just her bosses. But ever adaptable, she is probably going to learn her lesson.

Bank Leumi CEO Rakefet Russak-Aminoach. Credit: Michal Fattal
Rakefet Russak-Aminoach, left, meets with Nochi Dankner at the Sea & Sun eatery, Herzliya, September 2010.Credit: Moti Kimche

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