The beating Bank Hapoalim's (TASE: POLI ) has taken on the market has Bank Leumi (TASE: LUMI ) worried about loans it extended that were backed by stock in its rival bank.

Bank Leumi is again demanding that the Dankner family provide more collateral to cover the NIS 1.4 billion borrowed to buy a stake in Hapoalim, which is guaranteed by the shrinking Hapoalim shares.

The loan was technically made about a year ago to Israel Salt Industries (TASE: SALT ) . Leumi has demanded several times that Salt Industries provide more collateral.

This morning Salt Industries announced to the Tel Aviv Stock Exchange that since certain financial ratios linked with the value of Hapoalim shares have fallen below a minimum set in its agreement with Bank Leumi, Bank Leumi is again demanding more collateral.

Salt Industries added that at first it sought to grant Leumi rights on its liquid deposits, but after the financial ratios sank below the agreed-on limit, Leumi demanded that it place a lien on lands belonging to a Salt Industries subsidiary.

If it fails to provide the extra guarantees, Salt Industries says, Bank Leumi can demand immediate repayment of part or all of the loan. That would mean that Leumi could sell 0.6% of Hapoalim's outstanding share capital. However, Salt Industries says it and Bank Leumi are cooperating on the matter of the collateral.

To date, the market value of the Hapoalim shares that Salt Industries holds is NIS 1.08 billion. In its first quarter financial statements, Salt Industries registered them as being worth NIS 1.72 billion. Moreover, in its second-quarter statement to be published today or early next week Salt Industries is expected to raise that valuation to NIS 1.79 billion, after adjustment to inflation. That would boost the gap between the book and market value of the shares to NIS 700 million, which should be covered by the Salt Industries collateral.

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