Hard Look / Why Dankner Had to Go

The Bank of Israel demanded that Bank Hapoalim's controlling shareholder, Shari Arison, fire bank chairman Danny Dankner following a number of incidents that the central bank management felt showed problematic judgment.

Dankner had taken the chairman's seat two years ago, after Shlomo Nehama was tossed out. Among the problems the Bank of Israel cited during Dankner's term were the ouster of Amir Barnea as external director and the appointment of Irit Izakson as vice chairman - an appointment that the Bank of Israel managed to scuttle.

Nor did the Bank of Israel appreciate Hapoalim's fling with dangerous derivatives. Of all Israel's banks, it was the most exposed to the U.S. subprime market. The Bank of Israel had to force Hapoalim to sell its portfolio of mortgage-based securities before the loss could mount any more, beyond roughly a billion dollars.

Also, the Bank of Israel refused to allow Bank Hapoalim to buy a bank in Ukraine and another in Russia.

The central bank had been concerned about Dankner's sway over the bank. These concerns spiked with the resignation in late March of Hapoalim CEO Zvi Ziv over differences of opinion with Dankner, the nature of which the public never learned. The Bank of Israel was also concerned that Dankner's power would grow if Zion Keinan succeeded Ziv as CEO, because of the close relations between Dankner and Keinan.

Dankner, 49, is divorced with four children, and lives with his girlfriend in Tel Aviv. He is a cousin of Nochi Dankner, owner of IDB Holdings. He owns a controlling interest in Elran Investments, which is in trouble and sports a going concern warning on its books.