Bank Leumi Le-Israel(TASE: LUMI ) promised to indemnify officeholders in Leumi France up to a quarter of its shareholders equity, according to financial reports published today. Bank Leumi's equity is now NIS 12.59 billion, so the indemnity ceiling will be NIS 3.2 billion.
"The indemnity will cover a series of events including routine banking activity of Leumi France, merging, spinning-off, liquidating the Leumi France business, or related party transactions," the report states.
The bank notes the indemnity will be valid only after the officeholders have exhausted other rights from Leumi France itself or a third party (insurance company).
Lawsuits against directors and other officeholders have recently become popular globally, against a backdrop of increasing instances of embezzlement and Enron-style affairs. Officeholders are therefore demanding more indemnity from their employers, causing insurance companies to increase premiums for the coverage and raise deductibles. In addition, the bank promised to indemnify underwriters of the sale offer and share issuance that had been slated to be conducted based on Q4 2001 financials but were postponed yesterday. The indemnity covers any sum the underwriters could be ordered by the courts to pay for the publication of misleading information in a prospectus.
* Leumi France investigated under warning