Bank Hapoalim (TASE: POLI), headed by Arik Pinto, is implementing rather more quickly than expected the directive of the Supervisor of Banks on cutting back overseas activity. The bank announced today that it will close its wholly owned subsidiary Bank Hapoalim Switzerland, either through a sale of assets or in some other fashion. The bank's announcement is surprising in that just last year it decided to revamp its business in Switzerland, to sell part of it and to develop the remainder. Now it has decided to sell everything.
Two days ago, the Supervisor of Banks told Israel's banks to reduce their overseas activities and to improve their risk management. Bank Hapoalim's decision on Hapoalim Switzerland was presumably made before Supervisor Hedva Ber issued her directive. After the closure of Hapoalim Switzerland, Bank Hapoalim will have no substantial private banking business overseas.
The bank's initial estimate of the cost of exiting its Swiss business, mainly severance pay for employees in Switzerland and commitments under long-term rentals, is NIS 110 million, to be included in its third quarter financials. The bank says that further costs may be incurred after the third quarter.
Bank Hapoalim said that the decision to quit Switzerland was made in the light of its risk management policy, which calls for minimizing compliance risk in the group, such as arose in the investigation by the US authorities of alleged complicity in tax evasion by US citizens, in view of changes that have taken place in the global regulatory environment and their impact on such risks.
Bank Hapoalim Switzerland mainly provides private banking services through its branches in Zurich and Luxemburg. It also operates through an investment consultancy in Israel (BHI Global Investment Advisory (Israel) Ltd.) and an Israeli representative office.
In the same notification to the Tel Aviv Stock Exchange, Bank Hapoalim reports that it has signed a memorandum of understanding with Bank J. Safra Sarasin AG and Banque J. Safra Sarasin (Luxembourg) SA for the sale of its private banking customer assets portfolio in Switzerland for NIS 98-100 million. The deal is expected to be completed in the second half of 2018.
Bank Hapoalim also says that it continues to carry out internal examinations in connection with the investigation by the US authorities, and that it is engaged in intensive discussions with those authorities with the aim of arriving at an agreed settlement within the next few months – but no agreement has yet been reached.
Published by Globes [online], Israel business news - www.globes-online.com - on October 3, 2017
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