Public fury over debt settlements is growing. In the wake of the proposed debt settlement between Bank Leumi (TASE: LUMI) and Nochi Dankner, Minister of Finance Yair Lapid and Governor of the Bank of Israel Prof. Stanley Fischer have decided to establish a committee to review debt settlements.
"Following discussions this week on a debt settlement between Bank Leumi and Ganden Investments Ltd., controlled by Nochi Dankner, and Bank Leumi's announcement today that it has cancelled the settlement, Minister of Finance Yair Lapid and Governor of the Bank of Israel Prof. Stanley Fischer have decided to establish a committee to examine the issue of debt settlements in the economy. The committee will submit its recommendations to the minister of finance and the governor of the Bank of Israel," the Ministry of Finance announced today.
Lapid and Fischer will decide on the committee's members this week. Committee members will include experts and public figures.
The announcement of the committee follows the public pressure on Bank Leumi's CEO to cancel the proposed debt settlement with Ganden. "The outline arrangement, which in any case had not become a signed agreement, has become redundant and is no longer on the agenda," the bank stated. It added that Bank Leumi CEO Rakefet Russak-Aminoach had instructed the bank's staff to employ every option available to it to recover the debt.
Public anger was reflected in demonstrations against Bank Leumi and threats to withdraw money from it. Radio 103 host Natan Zahavi called on the public to take its money out of accounts at the bank.
According to data collated by the State Comptroller in an in-depth investigation into debt settlements and write-offs, there were 94 debt settlements with bondholders in 2008-11, totaling an aggregate NIS 21 billion.
Sources inform ''Globes'' that most of the settlements during this period exceeded NIS 100 million. According to the State Comptroller's investigation, 72% of the bank credit in 2011 went to 2% of borrowers.
Published by Globes [online], Israel business news - www.globes-online.com - on April 21, 2013
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