Continental Bank loans to Peled-Givony group comprised 75% of its equity

Continental Bank extended NIS 190 million, 75% of its equity, in credit to the Peled-Givony group, Ha'aretz has learned. As the group collapses, Continental a subsidiary of Bank Hapoalim - will have to make extensive provisions for doubtful debt.

Continental Bank is jointly owned by Bank Hapoalim (63%) and the Sweden-European Bank SEB (37%). In practice it was run by Bank Hapoalim.

The Bank of Israel prohibits commercial banks from lending more than 30% of their equity to a single group. Continental Bank did not formally violate this provision. The Peled-Givony group companies were organized in a way that obeyed the letter of the law.

Under the definitions of the central bank, a single group of debtors is one in which at least one of the debtors is a substantial guarantor for the other's loan; one in which each of the debtors owes the bank more than 5% of the bank's equity and in which the debtors are dependent on one another in the long run; or any other group that is declared as such.

Bank Hapoalim's spokesperson would not comment.

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