Banks Need Full-time Chairmen, Rules BoI

The Bank of Israel's supervisor of banks is unlikely to approve the appointment of any more bank chairmen who do not serve full time, in order to block potential conflicts of interests arising from the chairmen's other jobs.

Plus, in theory, the chairman of a bank should have a demanding job. If he doesn't, he's doing something wrong.

Three of Israel's big banks have part-time chairmen: Jacob Perry of Mizrahi Tefahot, with a 60% job; Eitan Raff of Leumi Bank, with an 80% job; and Jack Eldad of the First International Bank of Israel, with a 90% position.

The banks report that Eldad holds no additional posts, other than chairing the bank's subsidiary, UBank. However, Leumi's chairman Raff is serves on two additional boards, the telecoms company VeriFone (he joined the board in 2007) and Aeronauticsa defense company operating out of Yavneh. Raff is also an advisor to the Mayer family.

Jacob Perry is chairman or board member for 12 organizations beyond Mizrahi (see the feature on the right.)

While the Bank of Israel apparently can't intervene in existing employment contracts, and can't block current chairmen from continuing to serve part time, it is unlikely to approve new part-time appointments.

The issue has arisen over the appointment of Leumi Bank's new chairman - at least one of the leading candidates is said to be seeking to serve part time.

The Bank of Israel also opposes having chairmen serve both at a bank and at its subsidiary, in part due to concerns that this could compromise the holding bank's supervision of its subsidiary.

This is also relevant at the moment - Joseph Bachar's appointment to chair Discount Bank is pending, and the question has arisen as to whether he will be permitted to chair the bank's subsidiaries, too.