22 August 12 13:55–The Bank of Israel is concerned about the financial position of IDB Holding Corp. Ltd. (TASE:IDBH). “Globes” has learned that Supervisor of Banks David Zaken has instructed the banks to classify the debt of IDB, controlled by Nochi Dankner, as problem debt. “Globes” has also learned that some of the banks, including one of the large banks, have already carried out the classification, and that provisions were made against IDB’s debt in previous financial statements. The Bank of Israel declined to comment on the report.
IDB’s debt to the banks is spread among the companies in the group. The debt of controlling shareholder Ganden is estimated at NIS 500 million, IDB Holding’s debt is NIS 130 million, while the debt of IDB Development, whose financial position is better than that of the previously mentioned companies, is about NIS 2 billion.
The debt to be classified as problem debt is credit granted to the holding companies at the head of the pyramid, and not credit granted to the subsidiaries, such as Cellcom Israel Ltd. (NYSE:CEL; TASE:CEL), Shufersal Ltd. (TASE:SAE), or Koor Industries Ltd. (TASE:KOR). Most of the credit is from Bank Hapoalim (TASE: POLI) and Bank Leumi (TASE: LUMI). Bank Leumi is chiefly exposed through credit granted to Ganden.
Highest risk level
Sources also inform “Globes” that the Bank of Israel sought to ensure that the debt of parent company Ganden should be classified as problematic. In the first quarter, Bank Leumi and Mizrahi Tefahot Bank (TASE:MZTF) made provisions of at least NIS 240 million against loans to Ganden. The provisions were made because of the fact that the shares in IDB held by Nochi Dankner, which represent the collateral for the loans, have fallen in price by tens of percentage points in the first quarter, such that their value was, and remains, substantially lower than the debt…Read More>>