Mizrahi Tefahot Bank (TASE:MZTF) is following in the footsteps of other Israeli banks by cutting back on its presence in Latin America. The bank's financial statements show that it closed down its office in Panama last year. Mizrahi-Tefahot has also decided to close down its offices in Uruguay, a measure that will be completed this year.
Mizrahi-Tefahot also has offices in Mexico and Germany, and it appears that at this stage, there are no plans to close them down. The bank also has offices in Los Angeles and London, and a subsidiary in Switzerland operating in private banking and credit for real estate purchases in Israel.
Mizrahi-Tefahot, managed by CEO Eldad Fresher, plans to focus its international business on London. The company branch in London is active mainly in business credit, foreign exchange, and private banking. While most of the Israeli banks have decided to close down their business in London, Mizrahi-Tefahot has decided to expand there, taking advantage of the fact that some of the Israeli banks have left the UK.
The credit portfolio of Mizrahi-Tefahot's international business grew 5% to NIS 3.3 billion in 2016. Most of the growth is attributable to business in London. Almost all of the Israeli banks had business in Uruguay, whether offices, a branch, or a subsidiary. These facilities served large parts of the Jewish community in Latin America. In recent years, however, the banks withdrew from Uruguay, due mostly to stiffer regulation of private banking and US regulatory investigations into suspicions that the banks abetted tax evasion by US customers, among other things with the help of the offices in Latin America.
Like Bank Hapoalim (TASE: POLI), Mizrahi-Tefahot is currently being investigated by the US authorities on suspicion of having helped its US customers evade taxes. A similar investigation against Bank Leumi (TASE: LUMI) culminated in a $400 million fine. Mizrahi-Tefahot has made a NIS 170 million provision for the affair so far.
The first Israeli bank to withdraw from Latin America was Bank Leumi, which closed down its branch in Uruguay several years ago. Two and a half years ago, Israel Discount Bank (TASE: DSCT) also decided to exit Latin America, selling Discount Latin America, located in Uruguay, to Spanish firm BBVA. Several months ago, Bank Hapoalim also decided to withdraw from business in the country and close down Hapoalim Latin America. Now Mizrahi Tefahot is planning to complete the exit of Israeli banks from Uruguay.
Published by Globes [online], Israel Business News - www.globes-online.com - on April 6, 2017
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