U.S. Tax Probe Into Israeli Bank's Swiss Subsidiary Still Open

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Mizrahi-Tefahot Bank announced on Monday stellar third-quarter results, while also saying the U.S. tax probe of its Swiss subsidiary has not been closed.

Israel’s fourth-largest bank and biggest mortgage lender, Mizrahi-Tefahot reported a bigger than expected rise in quarterly profit due to higher financing income and lower charges for credit losses. The bank said it earned NIS 301 million in the third quarter, up from NIS 260 million a year earlier and above a Reuters poll average forecast of NIS 285 million. Financing income rose 14.1%, to NIS 915 million, while charges against credit losses dipped to NIS 68 million, from NIS 116 million.

The U.S. Internal Revenue Service has been investigating allegations that American customers of United Mizrahi Bank, Switzerland used accounts at the bank to avoid paying U.S. taxes.

The bank reported in its financial statements that it is one of 14 Swiss banks that will not be included in a deal between Swiss and U.S. authorities under which the cases against them will be closed in exchange for a fine.

In its recent financial statement, the bank reported that it received requests for information from U.S. authorities regarding bank customers. The bank said it is cooperating, in accordance with the law and treaties between the United States and Switzerland. In the past, the bank reported provided general figures regarding the bank activity of its American customers to U.S. authorities.

Mizrahi-Tefahot did not declare a dividend in the third quarter, after paying a dividend for the second quarter. The bank says it expects to distribute dividends through the end of 2014 of up to 30% of annual net income from regular operations.

A Mizrahi-Tefahot branch in Israel.Credit: Eliyahu Herkowitz

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