Netanyahu, Lapid to decide on new Bank of Israel chief by Sunday

JERUSALEM (Reuters) - Israel's prime minister and finance minister will announce their choice for new governor of the Bank of Israel by Sunday, the Finance Ministry said.

Prime Minister Benjamin Netanyahu and Finance Minister Yair Lapid met for two hours on Wednesday night without reaching a decision, according to a text message from Lapid's spokeswoman.

Once a final decision emerges it will end a rocky and at times embarrassing selection process for Israel that has dragged out for months and included two failed nominations. <L6N0G92OE>

Three remaining candidates who have been approved by a vetting committee are former Argentinian central bank president Mario Blejer, former Bank of Israel Deputy Governor Zvi Eckstein and former Mizrahi-Tefahot Bank <MZTF.TA> Chief Executive Victor Medina.

Previous central bank governor Stanley Fischer stepped down at the end of June after eight years in the job. His deputy, Karnit Flug, is currently acting governor, but after being passed over numerous times for the top spot, she has said she will step down once a new appointee is in place.

Much uncertainty has been created by the vacuum left by Fischer, a world-renowned economist who brought much prestige to the Bank of Israel. He is seen as a tough act to follow and Netanyahu Lapid have lost face in their handling of the process.

Netanyahu and Lapid initially chose Jacob Frenkel, Israel's central bank governor in the 1990s and currently the chairman of JPMorgan Chase International <JPM.N>, to succeed Fischer, but he pulled out following reports that he was arrested on suspicion of shoplifting at Hong Kong's airport in 2006.

The charges were later dropped.

A second candidate, Bank Hapoalim Chief Economist Leo Leiderman, also dropped his bid two days after his nomination, citing personal reasons.

(Reporting by Steven Scheer and Ari Rabinovitch)