Impatience on the part of the financing system resulted in a 25% increase in insolvency claims in the first half of 2012, compared with the first half of 2011, reports Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) unit Clal Credit Insurance Ltd. The company says that most of the growth in insolvency claims was accounted for by local companies in a range of sectors, which had high leverage and could not service their debts because of market conditions.
Clal Credit Insurance says, "Other reasons for the increase in claims are the reduction in credit by the banking system, the demand to reduce credit frameworks, and impatience by the financing system." It adds, "We doubt that the situation will change for the better in the short term… The increased risk in the business environment is liable to be with us for a long time, a fact that will raise the likelihood that more companies will fall into difficulties. Companies can keep their heads above water for a while, but if this continues, they are liable to face major difficulties."
Clal Credit Insurance CEO Shlomi Sarid adds, "Overseas, especially in Europe, as well as in Israel, we have not had long enough from the last crisis to enable companies to recover, so that the proximity of the crises is also problematic."
As for the global economic conditions, Said says, "The company is closely monitoring several countries in the eurozone." Despite the results of the Greek elections, he does not rule out that Greece will be forced to leave the euro in a few months. "We've taken measures to reduce credit frameworks for various debtors in Greece, but they have not been cancelled altogether. We don’t think that all companies in Greece will not pay their debts or get into financial difficulties… and I must state that up until now we have not encountered any payment problems on the part of our clients' debtors in Greece."
Published by Globes [online], Israel business news - www.globes-online.com - on June 25, 2012
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