Antitrust Banking Probe Widens; Inspectors Raid Mizrahi, Discount

The antitrust investigation into the banks widened yesterday as inspectors raided the headquarters of Israel Discount Bank and United Mizrahi Bank.

On Monday, investigators raided offices of the country's two largest banks, Hapoalim and Leumi.

Like Hapoalim and Leumi, which both denied any wrongdoing, Discount commented yesterday that it follows proper procedure, and will fully cooperate with the investigators. Mizrahi confirmed the visit by the inspectors: "It's true, they came and are asking questions. We are happy to cooperate with them."

The Antitrust Authority, led by Dror Strum, has not stated the purpose of its investigation. When it hit Hapoalim and Leumi, the inspectors were said to be looking for evidence of cartel practices on policy regarding the credit cutoff to local authorities, because banks stopped extending credit to local government - even to those councils that are financially sound - after the Knesset passed a legal amendment denying banks' their right to exercise liens on errant authorities. But the expansion of the investigation to Discount and Mizrahi indicates they may have other goals in mind.

Neither Discount nor Mizrahi are considered serious players in the credit market for the local authorities, which raises questions over the true reason behind the raids.

Teams from the Antitrust Authority are still combing through paperwork at Hapoalim and Leumi. Yesterday they also turned up at the Bank Leumi legal department, searching through the office of the department chief, attorney Nahum Bitterman.

On Tuesday, the investigators visited the offices of other top executives, including the chiefs of the two big banks' commercial departments, Shay Talmon at Bank Hapoalim and Ehud Shapira at Bank Leumi. They also collected documents from the office of Leumi business development and strategy manager Yona Fogel.

Banking sources say the antitrust commissioner mentioned only the credit cutoff to the local authorities, but the documents being taken is far wider in scope.