Interest Rate Effects Not Yet Over, Warns Hapoalim Chairman

The head of Bank Hapoalim said yesterday that the effects of the recent Bank of Israael interest rate cut are not over yet.

"I don't think that the movement of capital in the wake of the interest rate cut is over yet," Hapoalim chairman Amiram Sivan told Ha'aretz. "We will see a decline in investments in shekel channels and an increase in investments in alternative channels - foreign currency, index and shares."

Sivan agreed to yesterday's interview on the basis of two conditions: "We don't talk about my salary and we don't talk about my future at the bank." Sivan has been in the media spotlight in recent months because he is the highest-paid employee in the banking sector (even though he recently took a voluntary 7 percent pay cut) and due to rumors that he is to end his tenure before the expiration of his contract.

Sivan said that 2002 had started with a high level of certainty about the economy, primarily due to the global economic crisis and the intifada. He said that in such dire times, the government should increase its involvement in providing employment and assist struggling enterprises.

"I don't believe that a struggling factory should be kept afloat artificially, but at a time like this, I would expect the state to help keep it going," Sivan said. "This is a temporary solution that will enable factories to survive the crisis, but it can't be a permanent solution."

Sivan said there is no basis for comparisons with the economy in the 1950s. "The Israeli economy is very far off from the austerity period," Sivan said. "The economy's potential is high, and that has been proved in recent years. I believe that things have not got worse for over half of the Israeli public, despite the economic crisis. Maybe 20 percent are having a difficult time, and they should be taken care of."