Eliahu Insurance Company Ltd. founder and chairman Shlomo Eliahu, the largest private shareholder in Bank Leumi (TASE: LUMI) today slammed the government's conduct in the selection process of the bank's next chairman. He also criticized regulation of the insurance industry. Eliahu spoke at the 7th annual insurance and long-term savings conference of "Globes", the College of Management, and Ernst & Young Israel.
Commenting on the election of the new directors at Bank Leumi, and the pending election of a new chairman, Eliahu said, "There's one thing that has terribly disturbed me in the past year: Bank Leumi is not being privatized in the public's awareness. For some reason, the public has the delusion that Bank Leumi belongs to the State of Israel. There's a shareholders committee, it has the power to select who is a worthy director. So they held a symposium, or general shareholders meeting a week ago to elect directors. But 90% of the bank belongs to the public, and for some reason it's hard for the government to release the shares. Please tell the government that it would be better to sell the remaining shares, and allow the shareholders to elect the chairman, as required by law."
Commenting on banking and insurance, Eliahu said, "There's an optical illusion between the insurance and banking industries. For some reason, the Insurance Supervision Division repeatedly copies the Bank of Israel's regulations when it comes to insurance companies. But there is a fundamental difference between banking and insurance: banks are leveraged and insurance is not. Banks are exposed to risk, and the Israeli government always stood beside a fallen bank, rescuing it.
"In insurance, dozens of companies have collapsed, and the government did not put its hand into its pocket or rescue a single company. The insurance industry receives directives from the Insurance Supervision Division, but first of all the government should announce that it will save fallen companies, and then give orders."
Eliahu said that this was not a new thing, since the Bachar capital market reforms.
Eliahu added, however, that after the Bachar reform, "The public's money went to the insurance companies from the banks. There should be supervision on companies that manage the public's money, just like there's supervision of the banks."
Published by Globes [online], Israel business news - www.globes-online.com - on June 7, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010