Bank Hapoalim (TASE: POLI; LSE:80OA) is expected to announce within weeks that it will not acquire Russian bank SDM. The reasons are the deteriorating global crisis, and Russia's worsening geopolitical and economic circumstances. In addition, Bank Hapoalim needs to improve its capital base.
Bank Hapoalim chairman Dan Dankner and the board will discuss the bank's work plan and international operating strategy on January 2, and then decide what to do. The bank declined to comment on the report.
For months, Bank Hapoalim officers have been advising against the SDM acquisition because of the drastic change in the macroeconomic conditions in Russia. The Russian economy is in freefall, due in part to the collapse of oil and commodities prices, and its geopolitical risk has increased. Officials at the Bank of Israel Banking Supervision Department have expressed their considerable dissatisfaction about the acquisition of a Russian bank.
Both the Russian and Israeli regulators would have to approve Bank Hapoalim's acquisition of SDM. The Bank of Israel will reportedly not approve it, and Bank Hapoalim will not fight for the deal.
In October, Governor of the Bank of Israel Prof. Stanley Fischer cancelled a permit for Bank Hapoalim to buy a Ukrainian bank, rescuing Bank Hapoalim from a problematic deal. Ukraine's economy collapsed in recent months and the country is on the verge of bankruptcy.
Published by Globes [online], Israel business news - www.globes-online.com - on December 30, 2008
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