Discount Bank will guarantee IAI deal with State of India for $600 Million.

CRS led this deal by reinsuring‭ $‬480‭ ‬Million‭, ‬with AA Reinsurers‭.‬


Discount Bank approved a huge‭ $ ‬600‭ ‬million guarantee to Israel Aircraft Industries‭ (‬IAI‭) ‬and Israel’s largest defense industry‭. ‬The total scope of the agreement is‭ $ ‬2‭ ‬billion‭.‬

On April 6‭, ‬under the direction of Yossi Weiss‭, ‬IAI signed an agreement to sell Barak 8‭ ‬defense missiles to the state of India for the Development of Defense Measures also known as DRDO‭.‬


The Barak 8‭ ‬being the largest and most advanced ground based missiles defense system in the region will be used by India’s ground forces for a total of‭ $‬1.6‭ ‬billion in order to provide larger quantities of missiles‭, ‬launchers‭, ‬communications systems‭, ‬command and control systems‭, ‬which include a more advanced radar system‭.‬


The Bank’s guarantees will be the main part of the agreement‭ ‬‮–‬‭ ‬the sale of Barak’s missile systems for‭ $ ‬1.6‭ ‬billion‭. ‬Discount Bank was the only bank that managed to place the guarantee within two weeks‭, ‬reinsured 80%‭ ‬of the guarantee and thereby reduced its exposure to‭ $‬120‭ ‬million‭.‬

Calcalist has been informed that the bank’s exposure to international AA reinsurers has been made possible through CRS Capital Relief Solutions owned by Esti Friedman and‭ ‬Itzik Klein who approached the reinsures to‭ (‬Re)insure 80%‭ ‬of the guarantees‭.‬


The extent of the guarantees to a single customer‭, ‬mainly from a medium-sized bank such as Discount‭, ‬is exceptional‭. ‬The deal was offered to other banks‭; ‬however‭, ‬Discount was the first bank to announce that it could issue the guarantees within the required timeline of two weeks‭.‬


The transaction required IAI to obtain advance payment guarantees‭ ‬&‭ ‬performance guarantees to the customer‭. ‬The advance payment‭ ‬guarantees are for the payments made by the Indians for the systems‭, ‬and the performance guarantees are guarantees that IAI will‭ ‬meet the supply and timetables set‭.‬


Bank Discount managed by Lilach Asher Topilsky issued guarantees which included both types‭. ‬The performance guarantees are for a‭ ‬period of 8.5‭ ‬years‭, ‬since IAI undertook to supply of the systems within a four-year timeline in addition to maintaining them for several more years‭.‬


The Barak 8‭ ‬system was developed with the aim of providing protection to vessels against current threats and its ability to respond to both air and ground danger‭. ‬The system is a joint venture of IAI and DRDO‭, ‬Rafael Military Systems‭, ‬IAI’s subsidiary‭ ‬‮–‬‭ ‬Elta Systems‭, ‬and the Indian companies BEL‭, ‬BDL and L‭ ‬&‭ ‬T‭.‬


On Aug 3‭, ‬2017‭ ‬the Indians made a first payment of‭ $ ‬250‭ ‬million‭, ‬and Discount has already provided an advance payment guarantee‭.‬


IAI has already sold Barak Systems 8‭, ‬which included command and control systems‭, ‬to several customers worldwide‭, ‬totaling‭ $ ‬3‭ ‬billion‭.‬


Since this is an off-balance-sheet transaction‭, ‬the profit to Discount Bank will derive from commissions on the transaction in and additional operating costs‭.‬


The deal was led by Discount Business Division‭, ‬headed by Orit Elster‭, ‬manager of large companies‭, ‬Uri Twig‭, ‬Head of the defense‭ ‬industries Tomer Grinshpan‭, ‬and Head of the syndication unit Orian Dagan‭.‬



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