The Marker 10/4/2016
Bank Hapoalim is in the midst of advanced negotiations with an international Reinsurers to purchase a coverage in the amount of 25 billion NIS for its housing bonds portfolio. The bank will grant the guarantees to those who purchase the property during the construction period to secure their payments. The transaction is led by the corporate division supervisor Jacob Orbach.
According to the agreement between the parties, it is expected to be completed by Q3/2016. The global Reinsures have secured a substantial amount of the portfolio in return for a commission charge. In addition, the international Reinsurers who are negotiating with Hapoalim Bank, have a rating of at least AA – therefore as a result the insurance policy will allow the Hapoalim Bank to release risk assets amounting to10 billion NIS, according to Basel 3. The transaction is expected to hurt bank profitability to some extent, due to the anticipated payment of premium.
The finalization of this process will allow Hapoalim Bank to increase the core capital adequacy ratio Tier 1 by 0.25%. By the end of December 2015, the core capital ratio of the Bank was 9.63%, in accordance with the banking supervision’s requirements. However, the target is to reach 10.2% by the end of 2016.
The Bank intends to achieve this objective through ongoing profitability and re-insuring the housing bond portfolio.