Banks Fazed at Fishman Losses

Eliezer Fishman's entanglement is worrying both the banking system and the Bank of Israel. Following his huge losses from a gamble on the Turkish lira, the banking sector is making efforts to minimize its own losses by increasing collateral and by closing open positions in the activities of companies owned by Fishman.

Assets such as VisaCal and Ten could be sold off, and it is believed that one of the large banks will hold off on the losses for a year, until collateral can be raised, or the Turkish lira strengthens.

Fishman's losses total NIS 1.4 billion, and according to estimates could even reach NIS 2 billion. Fishman's spokesman refused to comment on the figures.

Fishman began talks a month ago aimed at selling Ten, his fuel company. Ten is the fifth largest fuel company in the country, with 30 gas stations. The company is considered competitive, since its prices are on average 15 percent lower than those of nearby stations. TheMarker has learned that on Thursday night Yitzhak Tshuva met with Fishman to discuss two deals - the sale of VisaCal and Ten.

The value discussed for VisaCal is around NIS 1.5 billion, so that if the deal is closed Fishman will get a cash injection of NIS 360 million for his 24 percent stake in the company.

Stock market sources said that Tshuva always intended to help Fishman get out of trouble by buying VisaCal, but to sell it soon afterward. However, it seems that after a few days talks, Tshuva has "fallen in love" with the company.

Fishman owns 100 percent of Ten, and therefore the deal can be finalized very quickly. The price under discussion is around $60 million for all of the Ten shares.

Fishman operates on the currency markets via several of the companies that he owns. Banking sources said that he "doesn't leave any line empty", meaning that he takes advantage of every credit line that he has at his disposal to invest in currencies in which he has faith.

The Bank of Israel is also investigating the details and implications of Fishman's entanglement. The banks use risk management models that are supposed to provide answers in extreme cases. However, the collapse of the Turkish lira by 19 percent in a few days is an exceptional event by any standards.

"It's like the way they said that the Ayalon river would burst its banks once every 50 years, and it happened twice inside a month," said a senior banking source yesterday.

The questions raised by the affair are why the banks did not provide themselves with enough collateral and found themselves in a situation where they were under pressure to obtain it, why the potential loss was not was not limited in advance to a reasonable level, and how it came about that such a large and dominant client risked and lossed most of his capital in a failed gamble.

In recent days Fishman has met with managers of the large banks to work out an arrangement and to provide the banks with collateral. According to estimates, Fishman transferred cash to Discount Bank to cover his losses there.

Rumors are circulating that two other businessmen have also lost hundreds of millions of shekels on the Turkish lira, but this has been denied.