June 30, 2019 / 7:58 AM / 3 months ago

UPDATE 2-Israel's Bank Leumi CEO to resign, new chairman named

(Adds new chairman, analyst comment)

By Tova Cohen and Steven Scheer

TEL AVIV, June 30 (Reuters) - Bank Leumi said on Sunday Chief Executive Rakefet Russak-Aminoach will step down in the coming months after seven years as head of Israel’s biggest bank by market capitalisation.

The bank’s board also chose board member Samer Haj Yehia as Leumi’s new chairman.

Russak-Aminoach, who joined Leumi in 2004 as head of the business division, did not provide a reason for her decision in a letter to the bank’s outgoing chairman, David Brodet.

“I have decided the time has come to leave my post,” she said in the letter.

Leumi said Russak-Aminoach’s resignation would take effect after the bank’s board chooses a replacement for her.

Russak-Aminoach said she decided to announce her decision before the board chose a new chairman to replace Brodet, who is leaving Leumi in July after nine years.

The board met hours later and named a new chairman.

Haj Yehia, a director at Leumi since 2014, had been the first Arab board member of a major Israeli bank. He has a doctorate in economics from Massachusetts Institute of Technology and served as a vice president of Fidelity Capital Markets between 2006 and 2012.

The appointment still needs approval from Israel’s banking regulator.

Leumi shares fell 1.8% on Sunday in Tel Aviv.

Under Russak-Aminoach’s leadership Leumi was the first of Israel’s banks to reach a settlement with U.S. authorities following an investigation into tax evasion by its U.S. clients, agreeing to pay a $400 million fine.

Leumi’s chief rival, Hapoalim, is still seeking to reach a final settlement in a similar inquiry.

Hapoalim is also seeking a new CEO after Arik Pinto said he planned to step down at the end of 2019.

Israel Discount Bank, the country’s fourth largest lender, is also searching for a new CEO after Lilach Asher-Topilsky announced earlier this month she would step down to become a partner at the FIMI Fund.

In 2016, Israel passed a law capping bank executive compensation at 2.5 million shekels ($700,000) a year. Before this came into effect, remuneration for senior banks had risen to as much as 8 million shekels a year.

“In our view these moves are not surprising given that salaries at banks are capped,” said Barclays analyst Tavy Rosner, noting bank salaries currently imply a reduction of as much as 70 percent from before the law was passed.

$1 = 3.5668 shekels Reporting by Tova Cohen and Steven Scheer Editing by Alexander Smith and David Evans

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