Business in Brief: Top Two Bank Leumi Officers Face Big Pay Cuts as New Law Goes Into Effect

Israel Discount Bank slates major offering; Corporate bond issues grew 30% in 5776; Shares lower, despite gains by energy sector.

Reuters

Top two Bank Leumi officers face big pay cuts as new law goes into effect

Bank Leumi’s top two officers will see their compensation cut sharply as of October when the new law capping annual pay for financial-service executives at 2.5 million shekels ($666,000) goes into effect next month. CEO Rakefet Russak-Aminoach’s monthly pay will fall to 195,400 shekels (2.34 million shekels a year), from its level of 677,000 shekels (8.1 million shekels a year) in 2015, when she was Israel’s highest- paid banker. Chairman David Brodet’s monthly pay is due to fall to 168,200 shekels, or just over 2 million shekels a year, from 5.8 million shekels in 2015. Moreover, neither will be entitled to bonuses based on the bank’s performance. In fact, for 2016, Brodet is expected to receive compensation of 2.67 million shekels because of bonuses due him under his old pay package. Russak-Aminoach will get 3.75 million shekels. The pay-cap law sets top salaries at 35 times the lowest pay in the same company and limits the tax-deductible portion of salaries to 2.5 million shekels a year. (Michael Rochvarger)

Israel Discount Bank slates major offering 

Israel Discount Bank’s board authorized plans to raise money through an offering of stock and/or warrants that will probably be in the hundreds of millions of shekels, Israel’s fourth-largest bank said. “The offering is being made amid accelerated growth in the bank’s loan portfolio and to enable the business to grow at its full potential, increase profitability and improve the efficiency ratio and return on equity,” the bank said. Discount’s loan portfolio has grown about 5% so far this year and its capital adequacy ratio as of the end of June was 9.5%, meeting the minimum set by the Bank of Israel. In related news, Discount said it was setting aside 45 million shekels ($12 million) in connection with an investigation of its CAL Israel Credit Cards unit, whose top executive helped  gambling and pornography websites take credit card payments. The bank said the probe was due to be completed soon. Discount shares dropped 3.9% to close at 6.83 shekels. (Michael Rochvarger)

Corporate bond issues grew 30% in 5776

The Jewish year of 5776, which concludes next week, saw a 30% jump in the value of corporate debt offerings, compared with the year before, to 64 billion shekels ($17.1 billion) data from the bond-rating agency S&P Maalot released Monday showed. One reason for the rise was that 5776 was a leap year, with an extra month, but the main reason was the huge appetite for debt from institutional and private investors in the absence of better alternatives, the agency said. Corporate bond offerings rose 48% to 44.5 billion shekels. Property companies accounted for a third of the funds raised, or 21 billion shekels, but the increase was just 10%, virtually unchanged from 5775 after factoring in the “leap month.” Financial institutions boosted debt issues by just 10%, to 19.5 billion shekels. The single biggest issue of the year was Mizrahi Tefahot Bank’s 7-billion-shekel bond issue. Spreads with government debt continued to narrow. (Guy Erez)

Shares lower, despite gains by energy sector

Tel Aviv shares followed world stock markets down Monday, with a rally by energy shares after a major gas-export deal with Jordan was announced doing little to offset an otherwise weak market. The blue-chip TA-25 index fell 0.4% to end at 1.456.58 points, while the TA-100 declined nearly 0.6% to 1,275.50, on turnover of 1.24 billion shekels ($330 million). Bank shares were down strongly, with Bank Hapoalim falling 1.4% to 21.23 shekels. Other big losers included Cellcom, which lost 2.6% to 27.64; Mannkind, which paced TA-100 shares lower on a 5.7% drop to 2.20; and Fox, which shed 3.8% to 62.21. Spuntech ended down 1.5% at 13.46 after the shareholders’ advisory service form Entropy initiated coverage of the company with a Market Underperform and a target price of 10.80. Avgol dropped 1.9% to 4.58 after the company failed to report warning signs about its ability to repay debt in financial reports going back to the end of 2012. (Guy Erez)