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Israel’s Hapoalim Provisions Additional $246 Million for US Tax Probe
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by Reuters and Algemeiner Staff
A Bank Hapoalim branch in Jerusalem. Photo: Djampa / Wikimedia Commons.
Israel’s Bank Hapoalim will set aside an additional $246 million to cover a potential settlement of a US investigation into possible tax evasion by the bank’s clients.
This provision, to be taken in the fourth quarter of 2018, will bring its total provisions to $611 million, or 2.29 billion shekels, Hapoalim said in a regulatory filing in Tel Aviv, noting it had held talks with US Department of Justice (DOJ) officials in recent weeks.
“It is reasonable to assume the total amounts which the bank will pay to settle with the American authorities, if achieved, will be significantly higher,” Hapoalim said.
Hapoalim, which has suspended dividend payments due to the uncertainty caused by the investigation, said its last meeting with DOJ officials was held on March 5.
The shares were down 2.7 percent on Thursday. They fell 7.6 percent last year while the index of Israel’s top five banks rose 4.8 percent.
“While today’s news is unfortunate, we see the shares as oversold on DOJ concerns and believe the market fails to account for Hapoalim’s strong capital position, which should allow the bank to grow its risk-weighted assets while maintaining its dividend policy,” said Barclays analyst Tavy Rosner, adding the bank can weather litigation costs of up to $2.4 billion.
Rival Bank Leumi in 2014 agreed to pay $400 million to settle two separate investigations into whether it helped US clients evade taxes.
