The Bank of Israel, the nation’s central bank, is preparing legislation for the Knesset that will give it extensive new powers of supervision over the country’s banking business, it was learned from reliable sources today. The more stemmed from the recent failure of the Agudath Israel Bank under circumstances that hinted at the emergence of a new financial scandal.
The Agudath Israel Bank which was on the verge of bankruptcy, has been taken over by the Bank Leumi, one of Israel’s major banking institutions, in order to save the deposits of its 19,000 clients. The Cabinet yesterday discussed the transaction and the circumstances leading up to it. The near collapse of the Agudath Israel Bank was attributed to improvident loans, most of which went to the bank’s principal shareholders, and to the bank’s involvement in dubious outside ventures.
Moshe Zanbar, Governor of the Bank of Israel, said the Agudath Israel Bank had been under supervision for 18 months. But he said stricter supervision was required over the smaller banks to spot departures from proper management practices and to safeguard the interests of depositors and customers. The Bank Leumi which has taken over the Agudath Israel Bank is the parent bank of the First Israel Bank of the New York and the Anglo-Israel Bank of London.
FURTHER LIGHT ON AUTO CAR SCANDAL
Further details in the alleged scandal surrounding the bankruptcy last year of the Auto car Co., the Israeli affiliate of the British Leyland Motor Co., came to light as the Knesset finance committee resumed its hearings yesterday. Former Transport Minister Moshe Carmel admitted to the committee that the government had pressured Auto car to acquire the falling Til auto assembly plant in Haifa.
Carmel said the government sought to merge the two firms in order to prevent the dismissal of 400 Til employes. The latter firm faltered when the Studebaker Corp. of the US went out of the automobile manufacturing business several years ago. According to Itzhak Shubinsky, former managing director of Auto car, the merger with Til was one of the main causes of Autocar’s bankruptcy. The firm was put into receivership last Nov.
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The Archive of the Jewish Telegraphic Agency includes articles published from 1923 to 2008. Archive stories reflect the journalistic standards and practices of the time they were published.
