Israel's banks are outraged at the stricter disclosure rules set by the Israel Securities Authority for bank investment offerings. A senior banker railed, "The Securities Authority is acting against the wishes of the Ministry of Finance to increase credit in the economy, and it's putting obstacles in the way of bond issues by the banks."
Several weeks ago, the Securities Authority notified the banks that a condition for the issue of bonds would be stricter disclosure. The Securities Authority is demanding better transparency about the banks' big borrowers by presenting a statistical matrix of borrowers on the basis of the amount of credit extended to them and broken down by areas of business. In this way, readers of a prospectus will know details about the large companies in each industry and the amount of bank loans to them.
The Securities Authority is also demanding more information about banks' nostro investments in financial instruments and securities.
The banks claim that the Securities Authority's new demands harm the banks' confidentiality. Since there are only a few large companies in Israel's various economic sectors, the matrix will make it possible by cross-referencing to identify borrowers and the amount of the banks' loans.
The Securities Authority dismisses the banks' arguments, saying that it was necessary to adapt disclosure rules to the current crisis.
Over the coming year, the banks will have to raise a massive NIS 10 billion in bonds. Some of the bond issues will be through the government's guarantee plan, and some of them will be independent issues. Some banks plan to formulate draft prospectuses on the basis of their 2008 financial reports, which will be published in late March, and after the prospectuses are approved, to issue debt securities in 2009.
The Securities Authority must approve these prospectuses, and it is now making new demands.
Published by Globes [online], Israel business news - www.globes-online.com - on February 19, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009