Bank Leumi (TASE: LUMI), run by president and CEO Galia Maor, will formulate a new dividend policy during the second quarter of 2010. The bank will reportedly revert to its old policy of distributing half of its net profit, provided that it meets its capital adequacy target, and obtains approval from the Bank of Israel.
Bank Leumi's has already set its equity target, and its capital adequacy target is currently within range. The bank is now waiting for minimum Tier-1 capital adequacy guidelines from Supervisor of Banks Rony Hizkiyahu.
Last week, Hizkiyahu said that he would set a specific Tier-1 capital adequacy target for each bank immediately after Passover.
On Thursday, Bank Leumi announced in the presentation of its financial report that it had set an original Tier-1 capital adequacy ratio target (the tier of capital comprising share capital and profits, and excluding bonds and deferred notes) of 8-8.5%. The bank added that it intended to maintain a minimum capital adequacy ratio of 14-14.5%.
"We will maintain a capital adequacy ratio that is above the minimum set by the Bank of Israel, and higher relative to the Israeli banking system and the OECD average," said the bank.
Bank Leumi's Tier-1 capital adequacy ratio was 8.33% at the end of 2009, under Basel II - The New Basel Capital Accord of the Basel Committee on Banking Supervision guidelines, and its capital adequacy ratio was 14.09%. Belying expectations, the transition to Basel II lowered Bank Leumi's capital adequacy ratio by just 0.19 percentage points.
Bank Leumi is not expected to distribute a dividend in 2010, but only in the first quarter of 2011, after its 2010 results are clear.
Published by Globes [online], Israel business news - www.globes-online.com - on March 28, 2010
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