"These are difficult times for all of us. As CEO of the bank, I look at you and tell you straight: Leumi uses every way for collecting its debts and utilizes all the means at its disposal," said Bank Leumi (TASE: LUMI) CEO Rakefet Russak-Aminoach in a letter to employees, in response to the media storm over the debt settlement with Ganden Investments Ltd., through which Nochi Dankner controls IDB Holding Corp. Ltd. (TASE:IDBH). The bank may write off NIS 150 million of Ganden's debt as part of the settlement, one third of the company's debt to it.
Russak-Aminoach was careful not to disclose any details of the settlement in the letter, but implied that the bank was not forgiving Dankner on personal loans. "I emphasize that the proposal does not include any forgiving of the personal commitments of the company's controlling shareholder," she wrote in an attempt to divert the fire from Bank Leumi. She broadly hinted that Dankner's personal debts were not held by Bank Leumi, but by the banks which extended credit to Tomahawk Investments Ltd., which is at the apex of the pyramid above Ganden. Tomahawk owes Bank Hapoalim (TASE: POLI) NIS 150 million, Israel Discount Bank (TASE: DSCT) NIS 100 million, Credit Suisse Group AG (NYSE: CS; SWX: CSGN; XETRA: CSGZ) NIS 50 million, and Mizrahi Tefahot Bank (TASE:MZTF) NIS 30 million.
Commenting on the sharp criticism of the debt settlement, Russak-Aminoach said, "In the past few days, we have been at the center of a lively public debate over the proposed debt settlement with Ganden. The public's feelings are not concealed from us. The public debate of the past few days has revealed widespread reservations to the proposed settlement." However, she rejects the criticism that the settlement was made because of the bank's ties with Dankner, and she continues to believe that the proposal is the best way to recover the debt. "In the opinion of the bank's management and board of directors, the proposal is best for the bank as a creditor of Ganden and IDB. Any debt settlement by the bank, as part of its banking business, is made in the best interests of the bank and its shareholders."
Published by Globes [online], Israel business news - www.globes-online.com - on April 18, 2013
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