(Recasts with new chairman named)
JERUSALEM, Nov 29 (Reuters) - Bank Hapoalim on Tuesday named lawyer Oded Eran as its new chairman, replacing Yair Seroussi who is stepping down at the end of the year after the bank was reprimanded for its handling of a sexual harassment complaint.
Eran, 61, has been a director at Hapoalim, Israel's largest bank, since February and a special consultant to the law firm Goldfarb Seligman & Co. He had been widely reported in Israeli media as the leading candidate for the job.
Eran will work together with Seroussi until officially replacing him Jan. 1, the bank said. The appointment still needs approval by Israel's banking supervisor.
Seroussi's departure was announced earlier on Tuesday.
"The chairman announced his resignation due to the environment and reports regarding recent events at the bank," Hapoalim said in a statement to the Tel Aviv Stock Exchange.
The harassment allegation made by an employee against a senior executive had been examined by the former head of Israel's Labour Court, who ruled there was insufficient evidence to support a claim of sexual harassment or abuse.
But the Bank of Israel criticised Hapoalim this month for not reporting the complaint to the banking regulator as required.
The employee has since left the bank.
Hapoalim said on Monday that it was in talks to shorten Seroussi's term, which began in 2009. Seroussi, who established Morgan Stanley Israel in 1993, has also held senior positions at Israel's Finance Ministry.
The Bank of Israel had decided to review Hapoalim's conduct because Israeli banks are required to disclose to the regulator allegations of misconduct at a senior level.
Reporting by Ari Rabinovitch and Tova Cohen; Editing by David Goodman and Jane Merriman