Bank Hapoalim, Israel's largest lender, announced on Monday it is ending its private banking operations in Switzerland and Luxembourg, effectively closing its entire international private banking operations.
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The surprise move comes amid Hapoalim’s involvement in U.S. tax authorities' large-scale tax evasion investigation into the bank. The tax evasion investigation has not concluded, though has cost Hapoalim about 1 billion shekels ($282 million) to date. The bank said talks are continuing between the parties in an attempt to end the affair.
In addition, the bank had recently run a marketing campaign saying it actually planned on increasing its private banking activities in Switzerland, because it was the only large Israeli bank still operating in the country.
Hapoalim sold its international private banking operations, which focused on its branch in Miami and Latin and South America, several months ago.
The cost to the bank of closing down its Swiss operations and leaving the country is estimated at 110 million shekels ($31 million). At the same time, Hapoalim has reached an agreement to sell its account portfolio of private Israeli and European clients to the Safra banking group in Switzerland and Luxembourg for approximately the same amount, between 98 million shekels to 120 million shekels.
The bank said the decision was made in order to reduce its risk levels, in light of the U.S. tax investigation and changing international regulation.