Written by: Aaron Katsman | April 12, 2009
In a deal reached regarding seized Lehman Brothers assets, Bank Discount will get first dibs on those assets.
According to Globes: “The two banks agreed that Discount Bank will receive first priority and only afterwards will Bank Leumi receive funds. The compromise has the status of a judicial ruling according to the reports of Bank Discount. Sources in the banking system estimate that there are more than NIS 600 million of Lehman Bros. in Discount Bank., the same amount written off by the two Israeli banks in debts from the US investment bank. Therefore, if the legal process is realized vis-à-vis Lehman Bros. trustee, the two Israeli banks should fully realize their losses. The trustee of Lehman Bros. assets is the London accounting firm PWC and estimates are that the receivership process will take years.”
Good news for shareholders of both banks.
Written by: Aaron Katsman | March 13, 2009
In another signal that the Israeli economy is falling further into the abyss, Moody’s has cut the ratings of 4 Israeli banks. Interesting to note that Bank Mizrahi Tefahot did not get cut, as they continue to implement their conservative business model, which has kept them both profitable and out of much of the financial crisis.
According to Globes: “International ratings company Moody’s has cut its ratings for four Israeli banks: Bank Leumi (TASE: LUMI), Bank Hapoalim (LSE: BKHD; TASE: POLI), First International Bank of Israel (TASE: FTIN1;FTIN5), and Israel Discount Bank (TASE: DSCT). Moody’s has downgraded the long-term local currency deposit rating of Bank Leumi to A1 from Aa3. The Baseline Credit Assessment (BCA) was lowered to Baa1 from A3 and the bank financial strength rating (BFSR) was downgraded to C- from C. The bank’s A1 long-term foreign currency deposit rating and Prime-1 short-term deposit ratings were affirmed. The outlook on both the long-term local and foreign currency deposit ratings and on the BCA is negative, while the outlook on BFSR is stable.”
The resons cited for the downgrades were familiar. A slowing economy, bank exposure to construction and tourism which are both in trouble and lower profitability.
Let’s see if PM elect Benjamin Netanyahu, can turn things around quickly so that Israel can get a credit upgrade.
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Category:
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Tags:
bank hapoalim,
Bank Leumi,
bank mizrahi,
Bank of Israel,
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downgrades,
first international bank of israel,
israel discount bank,
israeli banks,
israeli economy,
Moody's Israeli rating
Written by: Aaron Katsman | February 21, 2009
As if the Israeli banking system needed more bad news, UBS came out yesterday with a negative report on the nation’s big banks. According to Globes: “The main event of the day was a report by UBS on Israel’s banks. UBS predicts that the banks will stay in the red through 2009 and 2010, and that they will need an aggregate additional capital injection of NIS 22.5 billion by the end of next year. The report sent the bank shares down. Israel Discount Bank (TASE: DSCT) had the sharpest fall of 4.1%. Bank Leumi (TASE: LUMI) fell 1.8% after also garnering a “Sell” recommendation. Two banks received a “Neutral” recommendation: Bank Hapoalim (TASE: POLI; LSE:80OA), which fell 1%, and Mizrahi Tefahot Bank (TASE:MZTF), which also fell 1%.”
We have spoken here about the potential for a large Israeli bank to fail. If you listen to the UBS report, that potential may turn into a reality.
Written by: Aaron Katsman | February 18, 2009
Citing a worsening global economic situation, Israel’s Bank Leumi issued their second profit warning for the 4th quarter. The bank now sees a loss of between NIS 700 million and NIS 800 million. Clearly business fundamentals for the bank are deteriorating as this is the second warning for the quarter in a very close time period.
According to Globes: “The bank, led by president and CEO Galia Maor, attributed the expected loss to a deepening global financial crisis, extended stock market drops around the world, and a worsening economic situation in Israel. This is Leumi’s second profit warning for the fourth quarter, after it ended the third quarter with a net loss. The bank estimates that for the full year of 2008 it will record net profit of NIS 475-575 million.”
The big issue for Leuim is whether they are well enough capitalized to ride out the crisis.
