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Leumi bank intends to reduce the risk on its NIS 25 Billion Housing bond portfolio – Led by CRS

The Bank is in advanced talks with global reinsurers for the purchase of NIS 25 billion in protection of the housing bond portfolio the deal will allow the bank to release 10 billion of risk assets and increase capital adequacy ratio at 0.3%. Leumi bank will purchase an insurance policy for the Sales Law guarantees.

The volume of Sales Law guarantees to buyers of homes in Leumi bank Bank, as of June 2015 is NIS 18.4 billion. Along with the additional guarantees such as performance guarantees comes to the amount of NIS 35 billion.

Since early 2015 Leumi bank faced significant challenge to increase the capital base of the bank.

Leumi bank is the primary affected by this the new regulation regarding calculation of employees pension obligations. since broad layer of workers still receive pension budget. But the bank is implementing gradually the directive and expected to draw it up to 2018. If Leumi bank was now using the guidelines in full (along with other changes), its capital adequacy ratio would stand at only 9%. The signs of a challenge to Leumi bank capital could be seen also in the reports for the second quarter of 2015, while the total loan portfolio of the bank grew by 4.2% compared to June 2014, compared with growth of 7.44% in Hapoalim Bank.

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