Taking Stock / New Banker in Town

Taken aback, we looked up from the notebook, just to make sure we weren't dreaming. No, it wasn't Joseph Bachar speaking, and no, we weren't at the treasury. We were at the Bank of Israel, and the person speaking was a deadly serious top central banker.

The top central banker spent five minutes explaining why it was a whole new era in the capital market, an era in which only quality of investment managers would count, and how this whole new era should be prepared for.

The thing is, it wasn't an isolated event. There's been a whole new text in banking circles over the last couple of weeks.

"The bank always supported the Bachar reform. Obviously the new structure, in which we are separated from asset management, is more logical and healthier, too," one banker said.

"Always supported? You took every opportunity in the last year to drive home your point that separating the provident and mutual funds from the banks is a disaster; that it's nationalization of your assets, an anti-competitive move that would just hurt the customers," we spluttered.

"Well, look, that's how negotiations are," the banker replied. "The real battle is over distribution fees that the customers pay us, so we had to fight separation itself with all our might to wrest concessions in the next battle."

"Obviously my life as a banker is much simpler now," confided the manager of a big branch. "From now on, my consultants can provide genuine advice. They can look the customer straight in the eye. From our perspective, it's a big improvement in company relations."

"But your management fought the Bachar reform?" we tried.

"Yes, it fought it," the branch manager acknowledged stolidly. "But it knew that at the end of the day, the structure the Bachar panel suggested made much more sense."

Did your phone ring?

Yes, ladies and gentlemen, the bankers didn't take long. They are already fighting the good fight of their next battle while preparing to live in the new era. They're not wasting time or energy looking backward.

Take Galia Maor, the manager of Bank Leumi. Nobody has had so much as a chance to read and digest the conclusions of the Bachar reform, and she ups and closes a giant deal, selling Leumi Pia mutual funds to Harel Insurance Investments.

What about Leumi Pia's customers? Just a few months back, the bankers were screaming that they couldn't possibly sell their provident and mutual funds while trampling the rights of helpless depositors, who surely had to be consulted first.

The Bachar committee forces Leumi to sell its provident and mutual fund holdings, but it left the bank free to choose to whom to sell. Maor could have chosen to sell Leumi Pia to an insurance company, to a local investment bank, or to a foreign one.

She chose Harel. Did she consult with Leumi Pia's clients? Did she open the subject of the clients' greater good for public debate? Of course not. She didn't even hold an open tender. On Thursday afternoon she announced that the money of hundreds of thousands of depositors in Leumi Pia funds was being transferred to the management of Harel, and that's that.

The sale is perfectly legitimate, of course. The idea of obtaining consent or consulting with customers is utterly absurd. That is how deals are done in the financial world across the globe.

The changing of the bard

The Leumi Pia-Harel deal is apparently just the first of many to come. The same goes for those frank comments by bankers in closed forums. Israel's bankers will abandon the wacky, contorted arguments they adopted against the capital market reform at warp speed, and will adopt new ones suited to the change in reality just as fast.

They aren't the first ones to suddenly sing new songs. Just look at the morphing reality of Dudi Wiessman and Dedi Borovich regarding the fuel sector.

Until recently, Sonol's shareholders trilled to everybody in town how they were teaching Paz and Delek a lesson. They pointed time and again to the strategic value of their relationship with the fuel trading behemoth Glencore, their partner in Sonol.

Yet now that they've decided to sell Sonol to Wiessman's Dor-Alon group, and now that they need the Antitrust Authority's permission to do it, they are singing a new tune.

Sonol can't compete with the Paz monopoly. Allowing Sonol to marry Dor-Alon is the only way to create competition, they carol.

Who should we believe? Wiessman and Borovich, who in the past vowed to conquer the fuel market on their own, grinding Zadik into Binoburger? Or Wiessman and Borovich, who complain that Paz is a monopoly and without a merger of Sonol and Dor-Alon, the fuel sector will remain bereft of competition forever?

You don't have to believe either one. Not the bankers in the pre-Bachar era, or the post-Bachar one: get it straight, the texts the businessmen feed to the press, including to Haaretz, are designed to serve their interests at a specific point in time. Tomorrow, when the situation changes, so will the text.

By all means, lend them your ear, but at the end of the day, reach your own conclusions. Use common sense. The score may be something entirely different from the song they're trying to pitch.