Despite the objections of the Bank of Israel, Merrill Lynch still sees Bank Hapoalim (TASE: POLI) paying an NIS 505 million dividend for 2002, or NIS 0.4 per share.

That sum is about half the bank's anticipated earnings for 2002, Merrill Lynch writes in a note a day ahead of Bank Hapoalim's financial statements for the second quarter, due for publication Thursday.

The market begs to differ. It would be "a miracle" if the Supervisor of Banks agrees to the dividend, given the state of the economy and the banks, say leading market sources.

Hapoalim last paid dividends in July 2001 NIS 649 million from its 2000 profits. For all of 2000, the bank distributed NIS 814 million dividends.

In 1999 it paid dividends of NIS 1.3 billion, and in 1998 NIS 864 million.

The Bank of Israel's position on prohibiting the banks from paying dividends in this quarter is rough on the Dankner family, which borrowed heavily including from Hapoalim rival Bank Leumi (TASE:LUMI) to buy its stake in Israel's biggest bank.

The Dankners have a looming bill of NIS 50 million interest on that credit, a tough row to hoe without some dividends income from Hapoalim.