Senior bankers, surprised by the appointment of Stanley Fischer as governor of the Bank of Israel, said today that were he governor when the Bachar committee was formulating its proposals, the proposals would not have been approved in their present format.
Some top bankers know Fischer from his frequent visits to Israel and from his work as Citigroup vice chairman during the past three years. Few know him, but all admire him.
Fischer is known as a major supporter of free markets, minimal regulation, and open architecture, things that in part directly contradict the Bachar recommendations. It is enough to read reports by International Monetary Fund (IMF), which opposes the Bachar recommendations, to grasp that Fischer's Weltanschauung does not conform to that of the Bachar report. Fischer served as First Deputy Managing Director of the International Monetary Fund between 1994 and 2001.
On the other hand, Citigroup (NYSE:C) supports the Bachar report, which will enable the world's largest banking group to expand its business in Israel. Fischer has personally said very little on the subject, but in the US management culture, people tend to adopt the positions of the enterprises in which they serve.
Whatever the case, Israel's bankers believe that Fischer will not reverse the Bachar recommendations. He cannot do so now that the cabinet has approved the recommendations and the Knesset is about to pass the relevant legislation. Fischer will not do that to the men who appointed him governor: Prime Minister Ariel Sharon and Minister of Finance Benjamin Netanyahu, who enthusiastically support the recommendations.
The banks place little hope on Fischer regarding the Bachar recommendations. They believe that he might support minor adjustments, but will not overturn them, even if he were inclined to do so. The Bachar committee heard Fischer's opinion while it was preparing the report, the same way it heard other opinions. However, what Fischer told the Bachar committee is not known.
The banks' sole consolation is that Fischer will be more tolerant toward them, hold similar views, and is more understanding of the business community's needs. Most importantly, he is coming from a US bank, the ones that Israel's banks most want to resemble. However, this is all in the future; the Bachar recommendations are already a fait accompli.
Published by Globes [online], Israel business news - www.globes.co.il - on January 10, 2005