Even after their meeting with representatives from Bank Hapoalim, UBS Warburg maintains its Hold rating for the bank.

In a special update on the bank, analysts Charles Silver, Stephen Levey and Christopher Malin say the bank is facing three major problems: The first, a $100 million loan to Gilat Satellite Networks (Nasdaq:GILTF), whose recovery plan is incomplete, and the second, a $600 million loan to local cable companies.

The analysts point out the cable companies' negative cash flow, which the bank estimates continue for the next few years. UBS says there is no imminent danger the companies will go bankrupt, especially since the banks will continue to pump them with cash so as to avoid write off of the original loans. They indicate however, the cable companies will continue to be a source of concern to the banks.

The third problem is commercial real estate companies, a risky sector in the UBS's view. After the great demand for industrial space in 1999 and 2000, the recent demise of many a hi-tech firm will have many contractors facing great risks.

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UBS says Bank Hapoalim agrees to the claim the interest rate slash will have minimum impact on the bank's portfolio. Until a significant change is made in the Israeli economy, large doubtful debt provisions will continue to take their toll on the bank's earnings.