FinMin backs regulator on Discount Bank dispute

JERUSALEM, Nov 4 (Reuters) - Israeli Finance Minister Yuval Steinitz said on Wednesday he would back the banking regulator on a decision by Israel Discount Bank's (DSCT.TA: Quote, Profile, Research) main shareholder to oust its chairman before his term ends.

Discount's controlling shareholder, the Bronfman-Schron group with a 26 percent stake, asked Chairman Shlomo Zohar to step down, the bank said earlier this week.

Discount, Israel's third-largest bank, did not provide further details. Zohar was scheduled to serve until February 2011. He was appointed in February 2006 after the group bought a controlling stake in the bank from the government.

The state still holds 25 percent of Discount as well as seven of the board's 15 votes.

The Bank of Israel has said it knows of no incident that led to the request for Zohar to resign and that it was looking into the matter.

"We are counting on the banking regulator to deal with Discount Bank and we will support the Bank of Israel," Steinitz said at a conference.

Should the issue of ousting Zohar come to a vote, Steinitz said the state will use its own judgment.

"We will consider the good of the bank and the good of the public," he said.

A Finance Ministry source told Reuters the government was seeking to find out why Bronfman-Schron asked Zohar to step down.