Dov Kotler, CEO of Bank Hapoalim (Photo by Yitzhak Gadi Dagon, Magma Images)
In the last two days, something has fallen in the capital market. Bank Hapoalim, the largest bank in Israel, has taken a clear and decisive stance against the salary correction of the three senior executives of the subsidiary, Poalim IBI. Before we get into the thickness of the beam, we will explain that Poalim IBI is the largest underwriting company in Israel and is jointly owned by Bank Hapoalim, the IBI Investment House and the public.
The underwriting company Poalim IBI has undergone a shake-up in recent years when its mythical staff, left it and set up a competing activity. Poalim IBI shuffled until the company withdrew Shai Nevo and Ofer Greenbaum from the competitor – Leumi’s underwriting company – with a particularly high wage agreement.
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The two together with Yaron Mozes managed to rehabilitate Poalim IBI and return it to the center of the stage in the underwriting market. This process happened to the company just in time when the capital market started to recover and a wave of issues began when IBI workers were there just in time to absorb this flood.
Here things started to get complicated, when the three sought in light of the rehabilitation campaign that transferred the company, to significantly improve the high salary anyway so that they get shares and options in the company and even reach a holding of 17% of it.
Here Bank Hapoalim has already started to get out of hand and stated that these are excessive wage demands that are not acceptable in the underwriting industry and in fact, the wage amendment hurts the shareholders of Poalim IBI (we will mention that this is a public company in which Bank Hapoalim is one of the largest shareholders). Moses Greenbaum and Nevo have decided that despite Bank Hapoalim’s opposition they are demanding the amendment of the wage agreement and they are putting it to a vote by the shareholders.
Here at the bank, they have already gone out of their way since it is not acceptable for employees of a company to take over and reach unreasonable wage levels, probably in light of the opposition of the major shareholder, certainly if it is the largest bank in Israel. And issued a scathing letter to the board with the aim of bringing him to a re-examination of the salary agreements with the three. Bank Hapoalim’s proposal was rejected and last night the agreement was put to a vote – and was rejected.
And from this point we are in Boca and Bulka. Capital market officials accuse Bank Hapoalim of being a populist and appointed ego of its senior executives. “Bank executives do not earn like Moses, Greenbaum and Nevo so they act on motives of – if I do not earn like this, you will not earn like that either.
“Beyond that, if you look at the process by which they transferred the IBI workers, you will find that without their work, the underwriting company, which was clear to everyone that it is the largest in Israel, would have evaporated.”
On the other hand, sources in the capital market say that it is not possible for three people, however talented, to earn 30%, 40% and in a constellation also 50% of the company’s revenues. This leaves the shareholders with an empty or almost empty asset and here the bank has to protect itself, its shareholders and along the way also the entire public. That is, those who hold shares of Poalim IBI but do not have the power that the bank has to face the three.
Here it is worth noting that Bank Hapoalim is not only a shareholder in Poalim IBI but is also a customer of the company and also brings work. According to estimates in the capital market, Bank Hapoalim paid the workers IBI commissions during the entire year 2021 in the amount of NIS 5.5 million, while in the first quarter of 2022, the Bank paid the workers IBI a commission of NIS 2.5 million.
“One should remember all the companies that come to Poalim IBI because Bank Hapoalim holds shares there or companies that want connections with Bank Hapoalim and so on and therefore the question should be asked what is the contribution of Bank Hapoalim to the company in the face of the damage it will cause if the bank stops working with it” A senior factor in the capital market.
Another significant figure emerges against senior IBI workers and especially against Ofer Greenbaum, the CEO. Of half of Epsilon’s revenue.
Sources in the capital market who are well involved in the details tell ice that there is no problem with Epsilon’s participation in IBI’s transactions, but this is a disproportionate situation, not for its share in Epsilon’s market and not for the market at all. “This is the real story here,” says a senior official in the capital market, who is well versed in the details. Not to that extent. ”
The senior official also said that the feeling is that the partnership in the issues of the two companies is not working for the benefit of all the shareholders of Poalim IBI. “I do not understand why putting Epsilon in such an amount of issues serves the shareholders of Poalim IBI. It seems like it better serves Epsilon’s shareholders and here in the bank are starting to wake up and understand that here is a significant story.”
One way or another, it seems that at least three senior IBI executives currently intend to demand that the company’s board discuss their wage agreement and approve it despite shareholders’ opposition. Their shares for three. But this will pave the way for Bank Hapoalim to work with other underwriting companies and it is dramatic, even very dramatic in the Israeli capital market.
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