Bank Hapoalim (TASE: POLI) CEO Zion Kenan resigned today. He began working at the bank 38 years ago as a teller, and was appointed CEO seven years ago. His contract was due to expire in 18 months. Deputy CEO, COO, and head of strategy, resources and operations Ari Pinto is expected to replace him.
Kenan will officially finish working at the bank in six months. The announcement to the Tel Aviv Stock Exchange (TASE) did not cite a reason for his resignation, and Kenan stated in Bank Hapoalim's press release, "On reaching age 60, after working at the bank for 38 years, I have decide that it is time to look for new challenges, now that I have completed the bank's restructuring plan, which puts it in an excellent position for dealing with future challenges."
Kenan's resignation comes after the Knesset last week passed a law limiting the salary of senior officers in fnancial firms to 44 times the payment of the lowest-paid employee in the firm, up to a maximum of NIS 2.5 million a year, after which taxation penalties come into effect. Kenan was paid NIS 7.9 million in 2015, and the cost of his salary since he became CEO totaled NIS 71.1 million. Bank Hapoalim's share price has risen 58% since he became CEO.
Kenan chose to resign his position at a time of public opprobrium towards senior executives in the financial sector, especially at the banks. The Strum Committee for increasing competition in banking set off a public debate about the banks, and some feel that public criticism of bankers is harsher than it has ever been. This has been reflected in statements by politicians against the bank executives, so it is no wonder that the bill limiting executive salaries passed the Knesset with no real opposition.
On January 13, Kenan announced a structural change at Bank Hapoalim and a round of executive appointments. Among other things, he appointed then retail division manager Ari Pinto as COO and deputy CEO, thereby designating him as his heir. Pinto is now expected to take Kenan's place.
Only one month ago, Bank Hapoalim published its financial statements for 2015, one of the best years in its history, with net profit up 14% to NIS 3.1 billion.
"Kenan had a great term at the bank," Leader Holdings and Investments Ltd. (TASE: LDER) VP investments Alon Glazer says. "He brought about a recovery in the local business and did more economizing than any other bank… the timing was right. It is very possible that the executive salary law will influence the retirement of executives in the sector, and it appears that it was more urgent for someone who has been CEO for seven years than for someone appointed CEO only now. I see no cause for concern. There will still be good people left in the banking system. It is important to keep in mind that it's not just the cut in salary, but also the public atmosphere. The feeling is that whatever you do as a bank manager, you are regarded as a public enemy."
"Globes": Is there any reason for investors to worry?
Glazer: "Bank Hapoalim does not depend on any one person. The share performed outstandingly under Kenan, but there are other good people there who will do good work. I won't change my recommendation for the share; it will still be 'Buy.'"
Kenan: I'll still advise the bank
In his statement to the press, Kenan said, "For 38 years, I went to Bank Hapoalim every morning with a sense of mission and pride, and I'll go on doing that for the next six months, until I step down from my position. Achieving our strategic targets and the financial results, which reached a peak last year, position us as the leading financial institution in Israel, and reflect the collective effort of the best team of managers and employees in Israel. Without them, Bank Hapoalim would not have achieved what it did. I'll go on advising the bank whenever it is needed.
"I want to thank controlling shareholder Shari Arison for her vision and faith that underly the bank's success, and for the support and trust she gave me; Arison Holdings Ltd. chair and CEO Efrat Peled for her leadership and backing in th face of all the challenges; and the board of directors, headed by chairman Yair Seroussi, for its unwavering support and cooperation."
Seroussi said in response, "The board of directors and I regretfully accept Zion's resignation announcement, but we respect his wishes." Arison added, "I appreciate and value Zion Kenan's contribution and work as Bank Hapoalim CEO, and thank him for his leadership, professionalism, and broad accomplishments. In his years as CEO, Zion guided the bank's management and employees. I regret his decision to resign his position, but he will always be part of the Bank Hapoalim family. I wish Zion great success, and thank him from the bottom of my heart."
Published by Globes [online], Israel business news - www.globes-online.com - on March 31, 2016
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