The way derivatives are booked will apparently send Israel Discount Bank and First International Bank into the red for the second quarter,


wrote today.

The technicality of how activities in options on the Maof-25 index was created by Bank of Israel regulations.

The central bank demands that the banks book their derivates assets according to fair value. Meanwhile, the fluctuations of the dollar forced customers to buy hedging instruments. The banks sold the derivatives when shekel interest was low, and were financially covered. But in June interest rates jumped by 4.5%, reducing the fair value of the derivatives, even though the banks suffered no real losses.