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The
$70 million would be in addition to $50 million Hapoalim has
already set aside for this matter, in which U.S. authorities are
investigating whether it helped American clients evade U.S.
taxes at its Swiss unit.
The provision follows a meeting Hapoalim representatives had
with members of the U.S. Department of Justice (DOJ) on Sept. 30
regarding a possible settlement between the two sides.
The bank said the provision did not relate to a separate
investigation being carried out by the New York Department of
Financial Services.
Hapoalim has denied the allegations.
Its main domestic rival Leumi <LUMI.TA> paid $400 million in
fines in late 2014 to settle two investigations into whether it
helped U.S. clients evade taxes.
Barclays analyst Tavy Rosner said the final amount Hapoalim
might have to pay to the DOJ could be significantly higher.
Noting that this announcement could weigh on Hapoalim's share
price, Rosner said that assuming the $70 million provision is
not tax-deductable, his quarterly net profit estimate would need
to be revised down to 629 million shekels ($167 million).
The U.S. investigations have weighed on Hapoalim's shares and
are the main justification for Barclays' "underweight" rating,
Rosner said.
"Today’s announcement shows that the bank is now having
face-to-face conversations with the U.S. authorities, which
could pave the way for a settlement in the coming months, in our
view," he said.
(Reporting by Tova Cohen and Steven Scheer; Editing by Greg
Mahlich)
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