Bank Leumi Cancels Dankner Debt Settlement

Bank Leumi bowed to pressure to cancel the debt settlement it had planned for Israeli tycoon Nochi Dankner, Globes reported on Friday.

“The outline arrangement, which in any case had not become a signed agreement, has become redundant and is no longer on the agenda,” the bank stated.

Analysts say that Leumi’s decision puts Dankner in a difficult position, and that he will have to find another way out of his IDB Group’s financial difficulties. Dankner himself had given written assurance to IDB employees that he would be able to reach a settlement with creditors over the 150 million shekel debt.

Bank Leumi, for its part, explained that the decision to withdraw from the settlement was not due to the public outcry, but was based on an assessment that certain investments Dankner was depending on would not be forthcoming,

In the meantime, Minister of Finance Yair Lapid and Governor of the Bank of Israel  Stanley Fischer have decided to establish a committee composed of financial experts and public figures to review the entire issue of debt settlements.

According to data compiled by the State Comptroller, there were 94 debt settlements with bondholders in 2008-11, totaling NIS 21 billion.

Sources inform Globes that most of the settlements during this period exceeded NIS 100 million. According to the State Comptroller’s investigation, 72% of the bank credit in 2011 went to 2% of borrowers.