The Bottom Line / Hapoalim's Tough Choice

It's a tough choice Bank Hapoalim faces. In fact, choosing a new CEO is always a tough choice, but the problem is especially poignant for Hapoalim under the circumstances.

It's a tough choice Bank Hapoalim faces. In fact, choosing a new CEO is always a tough choice, but the problem is especially poignant for Hapoalim under the circumstances.

Former CEO Eli Yones did not retire gracefully at the end of his contract and did not leave in order to spend more time with the kids or due to ownership changes. Yones, who received a remarkable opportunity relative to his banking experience, stepped down after less than a year as chief of Israel's biggest bank, since he refused to factor in the needs, desires and dignity of the shareholders who had appointed him.

His sudden resignation aroused a storm of speculation as to the incentive, from the shareholders' ire over Hapoalim's tremendous fourth-quarter provision for doubtful debt to ego.

The real story involves everything apparently. "The shareholders knew Eli Yones' uncompromising character," said a top banker. "They thought he'd be tough downward but be grateful to them for choosing him, and that he'd be considerate upward." They were wrong, as far as the upward consideration was concerned.

To the public and the Bank of Israel, Yones seems to have been ousted because he was too independent. Now the burden of proof lies on the shoulders of the key shareholders - Shari Arison, Shlomo Nehama and the Dankner family. Whomever they choose will be subjected to public scrutiny: Will he be the owners' lapdog? Will he distinguish between the better interests of the bank and of its shareholders? And, will he be able to steer a ship as big as Bank Hapoalim?

When it comes to finding a top banker looking for a job, they don't have much of a choice. Distinguished bankers are few and far between. Galia Maor of Bank Leumi and Victor Medina of United Mizrahi Bank have become accustomed to utter independence, and wouldn't come to Bank Hapoalim under the conditions the shareholders demand. Other external candidates are just as problematic. Israel Discount Bank's Giora Offer is not considered to have enough experience to manage a titanic ship like Bank Hapoalim. Worse, bringing in an outsider would be perceived as a vote of no confidence in Hapoalim's management.

That leaves only one person with the public standing and experience - First International Bank's manager, David Granot.

Indeed yesterday, Yedioth Ahronoth reported assessments that he's been offered the job. Bank Hapoalim and FIBI both denied any such offer, or even that his name officially came up. But informally it may well have to gauge the market's and the bank staffers' reactions.

Yet Hapoalim's top management and staffers evidently would prefer to nominate somebody from within, for which there are two candidates - Shai Talmon and Zvi Ziv.

Immediately after Yones' resignation, Ziv immediately climbed to the top of the shortlist. But his upside is also his downside: his reputation as a comfortable man could make the public see him as the owners' yes-man.

Right now the bets are on two finalists - Granot from the outside and Talmon from the inside. Talmon, a "lite" version of Yones, used to be the treasury's accountant-general, and therefore, knows a macroeconomic system when he sees one. He was also involved in the decision to set aside NIS 2 billion for doubtful debt in last year's fourth quarter. His appointment would serve the shareholders, who could deflect claims that they wanted Yones out over that decision.

Talmon has said he doesn't see himself running Bank Hapoalim, but if the owners want him to, they can help change his mind.

And there's always the third option - the surprise candidate that nobody thought of, such as Union Bank manager Zeev Abeles, a former supervisor of banks at the Bank of Israel, who has also become pretty familiar with commercial banking.