Bank of Israel's Supervisor of Banks Yitzhak Tal did not issue an instruction obliging the Arison Holdings group to sell its holdings in Housing & Construction (Shikun u'Binui), nor does he have the authority to issue such an instruction, "Globes" has been told.
The Arison Holdings group yesterday announced its intention to carry out a reorganization program that would involve shedding its real estate and construction operations, and focusing on finance, communications and high-tech. Arison Holdings will put up its holdings in Housing & Construction for sale.
The group announced that one of the reasons for the decision was restrictions imposed by Supervisor of Banks Tal on real estate credit, which forced Bank Hapoalim, in which Arison Holdings has a 20% stake, to increase its allowances for doubtful debts.
One instruction, which is meant to prevent sector concentration, bans banks from granting more than 20% of its overall credit to a specific sector.
Another instruction is intended to restrict credit granted by banks to "affiliated individuals" - controlling shareholders and board of directors members - for financing their business operations, so as to prevent potential conflict of interest. Under this instruction, overall credit granted affiliated individuals must not exceed 10% of the bank's capital.
Tal ordered bank Hapoalim to increase its allowance for doubtful debts, because the bank exceeded the 10% limit last year.
Published by Israel's Business Arena on 31 May, 2000