Continental Bank lost NIS 63.8 million in the second quarter, largely due to debts owed by the collapsing Peled-Givony group. In comparison, Bank Hapoalim subsidiary posted a NIS 1.6 million profit in Q2 2001.
Continental lent the Peled-Givony group a total of NIS 180 million, and consequently had to write off NIS 70 million in equity during the quarter. The sum would have been 25 percent of its equity at the end of 2001.
The group's collapse forced Continental into a NIS 59.8 million provision for doubtful debt in the second quarter, compared to just NIS 1 million in the parallel reporting period last year. Continental also set aside money for the Peled-Givony companies in the first quarter.
Altogether its doubtful debt provision totaled NIS 71.9 million for the two quarters, compared with NIS 3.4 million for the same half of 2001.
"The provision for doubtful debt is conservative and was made after consideration of the risks in our credit portfolio in general and in the state of the problematic borrowers specifically" the bank wrote in its financials.
Bank officials note that most of the specific provisions are for a number of borrowers who received funding from the bank in 2001, rebutting critics who said the bank continued to give Peled-Givony member companies credit even after media reports about the possible collapse of the pyramid surfaced.
The first-half loss rose to NIS 69.2 million, reducing the bank's capital adequacy ratio to 11.3 percent, versus 13.1 percent at the end of 2001.
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