Hapoalim CEO Quits After Building Bank Into Israel's Largest

  • Lender's shares slip Thursday, climbed 58% under CEO's tenure
  • Bank had been ordered to provision for U.S. tax-evasion fines

Bank Hapoalim Ltd. Chief Executive Officer Zion Kenan is stepping down after a seven-year tenure that saw the Israeli bank become the nation’s largest.

Kenan, 60, will remain in his position for another six months after informing the bank’s board of directors of his decision, according to a Tel Aviv Stock Exchange filing on Thursday.

While Hapoalim leapfrogged Bank Leumi Le-Israel Ltd. under Kenan’s leadership, the lender faces headwinds including potential fines stemming from an investigation into whether it helped American clients evade taxes. Israel’s banks also face a list of regulatory demands, including limits on pay and forced divestitures to encourage competition.

“Seven years is a long time and the timing makes sense,” said Meir Slater, the head of research at Bank of Jerusalem Ltd. in Tel Aviv. “With low interest rates, forced asset sales and a looming tax probe, the bank’s results may not be as good this year.”

The banking supervisor ordered Hapoalim last year to provision 196 million shekels ($52 million) for possible fines, after Bank Leumi agreed to pay a $400 million penalty in December 2014.

Hapoalim shares declined as much as 1.9 percent and were 1.4 percent lower at 19.42 shekels as of 4:37 p.m. in Tel Aviv. The shares have climbed about 58 percent since Kenan became CEO in August 2009, compared with Leumi’s 7 percent advance.

“I decided it was time to turn to new business challenges, after having completed the restructuring plan of the bank, which placed it at an excellent starting position for dealing with challenges of the future,” Kenan said in an e-mailed statement.

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