Report: Bank Leumi to pay NIS 1 billion fine to US over tax evasion suspicion

The Israeli bank will pay a billion shekels in fines to US authorities for alleged tax evasion in bank's US branches, according to Channel 2.

By JPOST.COM STAFF

JUNE 8, 2014 10:05

Updated: JULY 2, 2017 17:35

Bank Leumi 311 (photo credit: Ariel Jerozolimski [file]) — Bank Leumi 311

(photo credit: Ariel Jerozolimski [file])

Bank Leumi, one of Israel’s largest financial institutions, will pay a billion-shekel fine to US authorities for suspected tax evasion, Channel 2 reported on Sunday.

According to a US-led investigation, the bank’s American branches made illegal transactions to clients’ accounts while evading taxes, a violation of recent laws that passed in the US to curb the money-laundering phenomenon.

Leumi’s board of directors held a special meeting Saturday night, where it decided to pay the fine, the report said.

The compromise was reportedly agreed to by the US government.

Additional banks in Israel and abroad are also being investigated, analysts said.

Credit Suisse, for example, will pay the US $2.5 billion in fines. Israeli banks Mizrahi-Tefahot and Hapoalim are slated to pay fines as well, as part of a similar investigation.

For its part, Bank Leumi reported on Sunday that it is at an advanced stage of negotiations with the US Department of Justice on the question of the group’s activity vis-a-vis customers liable to pay US taxes in the period 2010/12.

The bank stated in its financial report for the first quarter of this year that intensive negotiations were taking place between the Leumi group and its representatives and the US authorities. Sunday morning, the bank said that it was moving towards a settlement with the US Department of Justice in line with proposals made by the latter.

In the light of the updated assessment of the amount of the expected settlement, the bank will increase its provision relating to the matter by NIS 460 million, so that the total provision will reach NIS 950m.

The extra provision will be booked by Leumi in the second quarter, which will materially affect its results for the quarter.

For the first quarter, Bank Leumi reported a net profit of NIS 625m., compared with NIS 570m. in the first quarter of 2013, representing a rise of 9.6 percent. The rise was mainly thanks to a NIS 124m. reduction in the credit losses item and a smaller tax provision.

Globes contributed to this report.