Business in Brief: March 1

Report: US investigates Leumi accounts; Fashion chain Castro exits Germany; Hershy Friedman takes over Azorim

By NADAV SHEMER, GLOBES CORRESPONDENTS
February 28, 2011 23:38
2 minute read.
bank leumi 298 88 aj check caption

bank leumi 224.88. (photo credit: Ariel Jerozolimski [file])

Report: US investigates Leumi accounts

• Nadav Shemer

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 An investigation by the US Department of Justice and the Internal Revenue Service into Swiss global financial services firm UBS has expanded to include Bank Leumi, the Financial Times reported Sunday.

According to the report, the broadening of the investigation followed allegations that Swiss bankers concerned about the probe had told their clients to shift assets to foreign banks, including Leumi and China Merchants Bank.

No allegations of wrongdoing have been made against the Leumi, which told the Financial Times it was unaware of the investigation. The expansion of the investigation follows the IRS’s voluntary disclosure program, which prompted 14,000 individuals to report offshore account and unpaid taxes in exchange for leniency, the report said.

Fashion chain Castro exits Germany

• By ILANIT HAYUT (Globes)

Fashion chain Castro Model Ltd. is leaving Germany, after co-CEO Gabi Roter announced that the board of directors had accepted management’s recommendation to sell its holding in the German subsidiary, Castro Deutschland GmbH & Co. KG. Germany’s Gerry Weber AG will buy the venture for NIS 5.5 million and also assume the subsidiary’s debts to employees and lessors of its stores.

The move is part of Castro’s apparent withdrawal from overseas markets, after eight years and tens of millions of shekels in losses. The company does not intend to renew the contract with its licensee in Thailand, which ends in August, and it is looking for ways to wind down its operations in Kazakhstan, a person familiar with the matter told Globes.

“For over a year, the German business has suffered from falling same-store sales, which the company attributes to several main macroeconomic factors: the economic crisis in Europe, the erosion of the euro exchange rate, and the switch in Germany to discount stores and increased online shopping,” Roter said. “In view of these factors, we realized that in order to make the German business profitable, we would need several more years of building the brand. We therefore decided to sell the company.”

Castro also plans to sell its Swiss subsidiary, he said.

Castro began operating in Germany in 2004, where it operates 14 stores under the Castro label.

Hershy Friedman takes over Azorim

• Globes correspondent

Canadian Jewish property developer Hershy Friedman has rescued Mizrahi Tefahot Bank from the Azorim Investment, Development and Construction Ltd. swamp.

Friedman will buy Shaya Boymelgreen’s 63.8 percent stake in the real-estate company for NIS 300 million, which gives Azorim a valuation of NIS 470m. Azorim’s current market cap is NIS 517m.

Friedman is to pay NIS 100m. cash immediately and the remaining NIS 200m. at the closing in a few months’ time. Former Sonol Israel Ltd. CEO Tamir Poliker, who has advised Friedman in recent months on the Azorim deal, will become Azorim’s CEO.

The controlling stake in Azorim was put up for sale by Boymelgreen Capital, which encountered financial difficulties. The sale was conducted by Mizrahi Tefahot Bank, to which Boymelgreen owes NIS 650m.


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