Hapoalim: Capital ratio intact without violating any central bank demands

Bank Hapoalim(TASE: POLI ) today responded to reports in Hebrew-language daily Ha'aretz this morning that the bank does not meet the 9% minimum capital ratio required by Bank of Israel. Bank Hapoalim notes that "the bank and the Supervisor of Banks have agreed that there may be instances in which supplementary capital is used as part of equity for the calculation of the required minimum capital ratio without this being considered a deviation from central bank policies or a violation of the Supervisor¿s directives."

Bank Hapoalim stated that the Supervisor knew when approving the financial reports for 2001 that supplementary capital would serve as a component in the minimum capital ratio calculation. The bank stated that it had adopted a policy of maintaining the 9% ratio without the inclusion of supplementary capital from a deferred capital notes issue at the end of last year, but a Supervisor¿s decision allowed the bank to raise NIS 2 billion, of which only NIS 615 million were raised. It is therefore clear that maintaining the ratio is dependent on a certain case of continued capital raising activities already authorized by the Supervisor.

The bank further stated "as long as the complete sum has not been raised, not only is there no basis for the claim that the bank does not meet central bank requirements, there is no factual basis for the claim the bank has violated any Bank Supervisor requirements concerning the minimum capital ratio."