The capital adequacy target for the banks under the Basel 3 rules is 12.5%. This emerges from a draft Bank of Israel directive that has reached "Globes". Currently, the banks have to maintain a capital adequacy ratio of 12%. According to the draft, the banks will have to have a capital adequacy ratio of 12.5% from January 2015. In addition, Bank Leumi (TASE: LUMI) and Bank Hapoalim (TASE: POLI) will have to reach a capital adequacy ratio of 13.5% by January 2017.
At the end of December, all the banks had capital adequacy ratios higher than 12.5%. Bank Hapoalim has the highest, at 15.1%. Leumi's is 15.02%, Israel Discount Bank (TASE: DSCT) and First International Bank of Israel (TASE: FTIN) have 14.2%, and Mizrahi Tefahot Bank (TASE:MZTF) has 13.11%.
The setting of a new capital adequacy target has removed a cloud of uncertainty. Now that the banks find themselves substantially above the target, this may affect the way they manage their capital, in some cases, and lead to a reduction in offerings of capital notes by the banks on the capital market.
Published by Globes [online], Israel business news - www.globes-online.com - on December 5, 2012
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