The Bottom Line / Good Cop or Bad Cop?

Supervisor of Banks Yoav Lehman has recently found himself in the shoes of a manager of the big banks, making the tough decisions.

Supervisor of Banks Yoav Lehman has recently found himself in the shoes of a manager of the big banks, making the tough decisions.

His instruction to the banks - to attribute the full debt owed by the merged cable-company-to-be to its two major shareholders, the Dankner group and businessman Eliezer Fishman - is just the latest example. Another was his instruction to Israel Discount Bank to set aside provisions of some NIS 180 million to reflect the fall in its investment in First International Bank of Israel.

In both cases, the banks may not like what they hear, but they have no choice but to obey. And while the Discount example is a fait accompli, the issue of the merged cable company is still up in the air - at least from the point of view of the banks, the owners of the cable companies and Judge Varda Alshech.

Monday's court hearing on extending Tevel's stay of bankruptcy proceedings also saw a discussion on the question of the cable company merger and the spanner in the works that Lehman has thrown in.

Lehman determined that the merged cable company's total debts of some NIS 5.5 billion be attributed both to Fishman and the Dankner group. The third major shareholder in the venture, IDB, was exempt from the clause, and it will be attributed only its pro rata share of the debt, as IDB was considered by the supervisor as less risky than Fishman or Dankner. Bear in mind that while Golden Channels (Arutzei Zahav) and Matav are not without their difficulties, only one of the three current cable companies is under court protection from creditors - Tevel, which is partly owned by ... IDB.

For Fishman and Dankner though, Lehman's instructions came as a body blow, and his position has stood the planned merger on its head. Slapping these two parties with the NIS 5.5 billion debt will curtail their business dealings, putting a brake on any possible future credit arrangements from the banks. Both Fishman and Dankner consider their ability to do a deal and their access to financing as far more precious than merging the three cable firms.

The judge believed the instruction to be a factor in scuppering the merger, and summoned Lehman to a hearing. The supervisor, however, cannot reveal all he knows about the financial standing of Fishman and Dankner; and one could hazard a guess that Lehman will field some of the questions Alshech is expected to bowl at him with the "banking confidentiality" let-out clause.

Were he to tell all he thinks and knows, then he would definitely stress that there is a limit to how much Fishman and Dankner need to borrow in relation to their equity and guarantees that they put up with the banks. The banks, for their part, don't quite understand this point, he would say, so I must break up the party myself.

This is how the supervisor has sucked himself into the shoes of the banking management; and his days are filled with tasks that former supervisors were saved from. In telling Discount to make provisions for its First International investment, he became a valuations expert. In determining that IDB is more robust than Fishman and Dankner, he's become a credit-rating agency.

Some of the banks may be grateful for what he has done, because it is easier for them to turn down a client's request when instructed to do so by the overseer. For the banking heads, it is hard to say no to the likes of Dankner, one of Bank Hapoalim's controlling shareholders, or to Fishman, with his myriad of businesses.

Lehman has been pushed into the "bad cop" corner by the banks and the big borrowers. But the public may see it differently, he's become their good cop, guarding their cash.