Leumi Sees Fines in Tax Probe

Sivan Aizescu
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Sivan Aizescu

Bank Leumi could face stiff penalties if U.S. investigators conclude that its Leumi Private Bank Switzerland unit abetted tax evasion, the bank has warned in its third-quarter financial statement.

That marks a change in the damage estimate the bank had provided until now. When Leumi reported its second-quarter results last summer, it said that "damage to the group cannot be reliably estimated." But when the bank issued its most recent financial report last Thursday it used stronger language.

"The results of the investigation by U.S. authorities could involve significant expenses for the group - among other things, as a result of the imposition of monetary fines on the group," it said.

Use of the word "significant" generally indicates over 5% of annual net income, which, in Leumi's case, could mean penalties totaling at least NIS 100 million.

Leumi Switzerland is currently under investigation by U.S. authorities in a probe that encompasses 10 other Swiss-based banks, including local units of Bank Hapoalim and Mizrahi Tefahot Bank, as well as Swiss banks such as Credit Suisse and Julius Baer. They are all suspected of assisting customers in avoiding payment of U.S. taxes and setting up offshore tax havens.

Hapoalim and Mizrahi Tefahot, meanwhile, basically reiterated in their third- quarter what they had said previously, namely that they've only provided U.S. authorities with statistical information on their dealings with their American customers, without giving out any identifying details such as their names.

Hapoalim and Mizrahi also differed with Leumi on the investigation's possible impact on their financial results.

Mizrahi said that as of now "there isn't any significant effect" on its Swiss operations. Hapoalimsaid it could estimate the implact of the probe.

A Tel Aviv Bank Leumi branch.Credit: Limor Edrey