Big customers are deserting

Israel Discount Bank

(TASE:DSCT) because it cannot extend them credit, claims Avital Bar-Dayan, the manager of Ofek's research department.

Ofek Securities and Investments belongs to the Bank Leumi group. Ofek's chief executive, Zvi Yogev, commented that while Ofek is well aware of Discount's tight capital adequacy, and of difficulties it may have extending credit, because of the bank's financial statements. But Ofek has no information about clients leaving the bank, Yogev said.

Two weeks ago one of the companies listed on the Tel Aviv Stock Exchange's Maof-25 index told TheMarker that Bank Discount, its banker, said it could not extend it credit.

According to the Bank of Israel, Bank Discount's minimum capital adequacy ratio reached 9.2% in the first quarter of 2002, the lowest level of any of Israel's five big banks.

Bank Discount is currently negotiating to sell part of all of its shares in

Israel Discount Bank of New York

. A deal over its fully-owned New York outfit would substantially improve its liquidity, actually making it the most liquid bank in Israel.

Surplus liquidity could help the bank contend to supply credit for major infrastructure projects now in planning stages, Bar-Dayan says. The projects will be backed by the state.

A spokesperson for Discount responded: "The bank does not intend to continue providing resources at the same prices it did before. The bank maintains a consistent policy of increasing margins on fresh credit, and optimizing the allocation of sources it extends."