Business in Brief: Cabinet Approves Amir Yaron as Next Bank of Israel Chief

Brookland Upreal tells bondholders it may not be able to repay debt in 2019 ■ Fallen tycoon Joseph Greenfeld reaches debt agreement ■ Mortgage lending profits at Israeli banks soared in first nine months

Prof. Amir Yaron
Wharton School of Business

Cabinet gives nod to Amir Yaron as next Bank of Israel chief

Amir Yaron, a professor at the Wharton School of the University of Pennsylvania, looks set to be the next governor of Israel’s central bank after the Israeli cabinet approved his nomination on Sunday. “I am aware of the heavy responsibility placed on my shoulders, and I will do all in my power to fortify the strength and continued growth of the Israeli economy,” Yaron, 54, said in a statement immediately after the cabinet decision. He still needs the approval of President Reuven Rivlin, which is expected. Yaron has lived in the United States for two decades. He cleared a special vetting panel earlier in November and would be sworn in on December 24, the Bank of Israel said in a separate statement. Yaron will succeed Karnit Flug, whose five-year term ended last week. Deputy Governor Nadine Baudot-Trajtenberg is currently acting governor and will head the monetary policy committee meeting on interest rates on November 26. (Reuters)

Brookland Upreal tells bondholders it may not be able to repay debt in 2019

Brookland Upreal, the New York-based real estate developer whose bonds are traded on the Tel Aviv Stock Exchange, warned bondholders at an emergency meeting on Thursday there was a risk it would not be able to repay them next year. The company detailed a long list of problems it is confronting, including contractors refusing to work at building sites, controlling shareholders injecting money into the company to ensure salaries were paid and late payments on the interest portion of some loans. “The current situation prevents me from coming to Israel, but I believe that we will meet investors face to face in the near future,” Boaz Gilad, one of the controlling shareholders, told investors by telephone from New York. He said Brookland was suffering delays in selling apartments and getting certificates of occupancy. One of a slew of foreign property developers to issue bonds on the TASE, Brookland owes about 150 million shekels ($40.5 million) to Israeli bondholders. (Eran Azran) 

Fallen tycoon Joseph Greenfeld reaches debt agreement 

After lengthy negotiations, Joseph Greenfeld, one of the controlling shareholders of the Kardan Group, reached a deal on Sunday that spares him being declared bankrupt but leaves his four bank creditors taking a big haircut on the 340 million shekels ($92 million) he owes them. Under the deal he reached with attorney Ofer Shapira, who is acting as special administrator of his assets, Greenfeld will repay 20 million shekels immediately from a loan he has taken from the Eini family. He also has to sell over his luxury Tel Aviv apartment to one of the banks, Union, within 42 months and turn over half the proceeds to creditors (the other half belongs to Greenfeld’s wife). He will also repay 30,000 shekels of debt a month over the next five years and turn over shares in Kardan NV to creditors. Banking sources said the debt agreement would yield them more money than having Greenfeld declared bankrupt. (Michael Rochvarger)

Mortgage lending profits at Israeli banks soared in first nine months

Israel’s four biggest banks saw their profits from mortgage lending jump 26.6% in the first nine months of 2018 from the same time last year to about 1 billion shekels ($270 million), according to their quarterly reports. The figure comes as Hapoalim, Leumi, Mizrahi Tefahot and Israel Discount have reported their third quarter results; First International will report theirs on Wednesday. The jump in mortgage profits is in part due to the spread between mortgage rates and Israeli government bonds of 10-15 years, which are 1% to 1.5%, an attractive figure rate at a time of near-zero interest rates. A strong Israeli economy and a low jobless rate have enabled the banks to reduce credit-loss expenses to nearly nil. Home loan rates have risen in recent years even as the Bank of Israel base rate has held steady, but with the central bank rate expected to begin rising soon, Israeli banks expect to hike mortgage rates further. Banks are keen to keep lending even though home prices have begun to fall. (Michael Rochvarger) 

Shares post gains but close off daily peak

Tel Aviv shares ended higher on Sunday, but spent most of the day drifting down from gains made early in the session. The benchmark TA-35 index finished down 0.35% at 1,640.61 points, while the TA-125 added 0.3% to 1,476.51, on light turnover of 483 million shekels ($130.4 million). Among the top gainers in the TA-125, Opko Health ended up 3.8%at 13 shekels and Nice advanced 3.1% to 423.40. Cellular operators rallied, with Partner Communication’s climbing 1.8% to 18.62 and Cellcom Israel rising 2% to 24.20. Among losers, TowerJazz extended losses, dropping 1.8% to 54.07 and Israel Chemicals dropped 1.3% to 22.92. In foreign currency trading, the euro strengthened more than 0.9% on Friday to a representative rate of 4.2169 shekels while the dollar gained 0.6% on the shekel to 3.7170. In the bond market, ADO Group raised 150 million shekels in a sale of bonds to institutional investors at a yield of 1.89%.  (Michael Rochvarger)