Mon, Jul 15, 2013 - Page 15 News List

Shoplifting incident dogs next Israeli central bank boss

AFP and Bloomberg, JERUSALEM

The appointment of Jacob Frenkel as Israel’s next central bank governor has come under a cloud over his failure to disclose a past allegation of shoplifting, local media said yesterday.

The Haaretz newspaper said that a committee on senior civil service appointments has asked the JPMorgan Chase International chairman to explain why he failed to inform it of a 2006 incident in a duty-free shop at Hong Kong international airport.

“As he was leaving the store, a bottle of cologne that appeared not to have been paid for was found among Frenkel’s belongings,” the paper reported.

“A security guard then apprehended Frenkel and prevented him from boarding his flight, with the event captured on security cameras,” it said.

It added that Frenkel was confined to an airport hotel for 24 hours before being allowed to travel.

He denies wrongdoing.

“Local authorities in Hong Kong reached the conclusion that this was an unfortunate misunderstanding, and expressed their apology and their appreciation that I did not sue them for compensation,” he said in a statement published in newspapers yesterday.

“I expect to take office as governor of the Bank of Israel in early October,” he said.

Israeli army radio said that the appointments committee would discuss his case later yesterday.

Frenkel, 70, was named last month to replace former World Bank chief economist Stanley Fischer, 69, who is stepping down from the central bank governorship after eight years in the job.

The nomination still needs Cabinet approval.

Frenkel already held the post from 1991 to 2000.

In related news, Israeli banks need to reduce costs to cope with lower interest rates and tougher competition, Supervisor of Banks David Zaken said.

“It’s unrealistic to know there’s a problem and not deal with it,” Zaken said in an interview at his Bank of Israel office in Jerusalem on Tuesday. “Israeli banks need to improve efficiency. Their expenses are relatively high and this is reflected mainly in salary costs.”

The nation’s lenders have struggled to spur profit growth as the central bank cut its base lending rate by 2 percentage points since 2011 to 1.25 percent to support economic growth, which slowed to an annualized 2.7 percent in the first quarter from 2.9 percent a year earlier.

About 60 percent of operational expenses at Israeli banks stem from salaries, the most of any country in the Organisation for Economic Co-operation and Development (OECD) after Denmark and compared with an average of 47 percent, Bank of Israel data show. The efficiency ratio of Israeli banks, which measures the effect of operational expenses on revenue, is about 70 percent, the data show. The OECD average is 62 percent.

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