Arison Ready to Compromise

Bank Hapoalim will release its first quarter financial report for 2009 next week. The battle between the Bank of Israel and Bank Hapoalim's controlling shareholder Shari Arison is likely to be decided before then, probably by the end of this week, either by Arison giving up the bank's chairman Dan Dankner - in other words, firing him - or by the central bank reaching a decision to launch proceedings to oust him. And it looks like the state comptroller, retired judge Micha Lindenstrauss, will not stand in the way.

Meanwhile, the Bank of Israel and the Arison Group continue to work toward a compromise. A source informed on the details of the ongoing confrontation between the central bank and Arison hinted yesterday that Bank Hapoalim's controlling shareholder is preparing to part ways with Dankner, but is seeking some type of honorable exit on his behalf. Nevertheless, the central bank is not willing to accept any compromise that will involve Dankner remaining with the bank, either as a director or chairman of one of its subsidiaries such as Isracard, or any other position.

Lindenstrauss met early this week with Arison, who complained about the treatment dealt by Bank of Israel Governor Stanley Fischer and Supervisor of Banks Rony Hizkiyahu, taking the opportunity to express her objections to their demand to oust Dankner. Arison asked the comptroller to investigate the Bank of Israel's handing of the matter, since the central bank is subject to his audit. Lindenstrauss promised Arison to review her request.

Although the comptroller is authorized to order the central bank to suspend the proceedings to oust Dankner, he has no intention of doing so in the immediate future. Knowledgeable sources estimate that a decision on whether to investigate the Bank Hapoalim fiasco would take weeks, while the central bank will meanwhile be taking steps to oust Dankner before then, and Lindenstrauss is not expected to intervene.

Some Knesset members believe that the comptroller is loathe to handle this hot potato, since if he blocks Dankner's ousting, in opposition to the Bank of Israel's position that cites Bank Hapoalim's very stability, the comptroller may be held responsible for future damage that could result though preventing the move.

And the battle between Hizkiyahu and Bank Hapoalim's board continued to wage yesterday as well, when the regulator agreed to meet with the board after refusing to do so up until now. The meeting centered around the regulator's criticism of the makeup of a search committee proposed by the board for the bank's new chief executive. The meeting appears to have ended without any decision.

The regulator apparently has no objection to the committee considering Zion Keinan as a candidate, but is seeking to ensure that the review is a thorough one, and that Arison be prevented from making her own choice, whether directly or by proxy.