Ind. Dev. Bank, treasury to finalize liquidation process
The management of Industrial Development Bank will meet with Finance Ministry Accountant General Nir Gilad today to finalize the terms under which the bank's assets and liabilities will be offered for sale.
Industrial Development Bank is now being run under the supervision of the Bank of Israel, after it reached a dangerous capital adequacy ratio a few months ago, causing a run on the bank.
Within 10 days, the bank's chair, Ra'anan Cohen, and CEO Uri Galili will be making sale offers to the large commercial banks. The treasury prefers the assets to be sold en bloc to a single buyer, since the revenues will be higher this way.
Bank Leumi has already offered to buy part of the portfolio and manage the collection of doubtful debts for the treasury for a cut of the take. Both Leumi and Bank Hapoalim have said they would need three to six months for the due diligence process before they make their decision.
Industrial Development Bank has hired the services of Herzog Fox & Neeman law offices and attorney Ofer Shahal to draft the sale plan. Sources at the bank said that the transaction involves complex legal issues since the confidentiality of clients has to be protected.
The Bank of Israel is applying serious pressure on the management of Industrial Deveopment Bank to complete the liquidation by the end of the year.
The central bank is demanding 48 percent interest on the loan that Industrial Development Bank has taken in order to handle its liquidity problem. Consequently, the bank will have to pay NIS 150 million in interest - a demand it cannot possibly meet.
So far, the central bank is unwilling to waive the payment unless Industrial Development Bank completes the liquidation process by the end of the year.
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