industrial development bank of israel ltd. summary of data the description of the bank presented...
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Industrial Development Bank of Israel Ltd.
Summary of Data
The description of the Bank presented below and the data included herein are not exhaustive and should not be construed to be a representation or commitment on the part of the Bank and/or its senior officers, or on the part of the State of Israel and/or the Government Companies Authority. This description and data may contain or be based on assessments of the Bank and/or on forward-looking information which, by its nature, is uncertain and may not be realized or which may prove to be inaccurate.
Year and type of incorporation
The Bank was incorporated in 1957 as a limited liability company.
The Bank is a public company and is defined as a mixed company pursuant to the Government Companies Act.
In 1989, the Bank was issued a commercial banking license.
On August 1, 2008, the Bank’s license expired and the Bank ceased being a banking entity.
Percentage holdings in the rights of the Bank as of December 2008
Voting rightsEquity
State of Israel45.78%82.14%
Bank Leumi19.32%0.24%
Discount Bank9.50%0.10%
Bank Hapoalim11.77%0.16%
Others13.63%17.36%
Shares traded on the Tel Aviv Stock Exchange Class of sharesQuantityMarket price as of
March 21, 2009Market cap as of March 21, 2009 (NIS millions)
Ordinary Preferred1,000,000450.04.5
C17,000,000223.538.0
CC1,000,0001,805.018.1
CC11,734,7792,100.036.4
Total market capon the Tel Aviv Stock Exchange 97.0
Shares not traded, held by foreign residents and Israeli residents*
Class of sharesPar value in dollars of shares ($’000) as of December 31, 2008
D1,657
DD6,199
Total7,856
* These shares are not part of the shares being sold and are supposed to be redeemed by the Bank upon consummation of the sale of the shares to the purchaser.
Major developments at the Bank in recent years
Receipt of credit line from Bank of Israel – new management at Bank
Activation of Run-off Plan and focus on credit collection and redemption of deposits of the public
Decision of ministerial committee to privatize the Bank as part of arrangement between Bank and its shareholders
Bank’s banking license expired
Continuation of the collections process
8/2002
2003 and thereafter
29/4/2008
1/8/2008
24/11/2008
31/12/2008
2009
State repays to the Bank NIS 857.5 million of the perpetual depositsBank repays Bank of Israel the balance of the credit line – NIS 304.5 million
Court approval of arrangement plan between Bank and its shareholders
Current activities of the Bank
The Bank mainly collects credit from a variety of clients (construction, industry, financial services and private clients)
The Bank has proven experience in debt collection.
The Bank has procedures regulating the granting of credit, management of credit and the required controls.
The Bank has a computerized system for managing credit (amortization tables, payment demands, etc.) developed over a number of years. The system provides for all facets of credit management and the accompanying financial reporting. The system belongs to the Bank and is maintained by an outsourced service.
The Bank has a computerized system for managing collateral.
Human Resources
The employees of the Bank have expertise in all areas of credit, including granting credit, setting up contracts, collateral generation, recording and maintenance of bookkeeping records, collections.
The staff of the Bank has experience in accounting (financial statement preparation) and law.
The Bank’s operations are carried out through four departments. Department heads report to the CEO. The Bank has 35 employees.
An agreement was reached with the employees which settles their rights upon privatization. The financial statements include a provision covering the Bank’s liability for this agreement.
Balance sheet as of December 31, 2008(NIS Millions)
31/12/200831/12/2007
AssetsCash and bank deposits575.333.8
Securities37.946.3
Credit to the public407.6557.9
Credit to the Israeli government2.824.7
Fixed assets0.50.8
Other assets3.37.2
Perpetual deposits with the Treasury29.9848.8
Total assets1,057.31,519.5
LiabilitiesDeposits of the public26.754.6
Deposits from banks-481.2
Deposits of the Government323.1356.0
Perpetual deposit0.10.1
Capital notes-20.2
Other liabilities63.950.7
Non-participating preference shares335.8276.0
Participating preference shares203.6170.6
Total liabilities953.21,409.4
Shareholders’ equity104.1110.1
Total liabilities and equity1,057.31,519.5
* Not including government-guaranteed credit to the Israel Electric Company and the deposit of the State which was used to provide this loan and which is supposed to be transferred to the State.
31/12/200831/12/2007Income from financing operations before allowance for doubtful debts 84.0 29.3
Allowance for doubtful debts)16.9()13.8(
Income from financing operations after allowance for doubtful debts 100.9 43.1
Operating and other income
Operating commissions 0.6 1.1
Income from investments in shares 1.0 8.7
Other income 1.4 1.7
Total operating and other income 3.0 11.5
Operating and other expenses
Salaries and related expenses 19.9 18.5
Expenses in respect of employee retirement 9.0-
Building and equipment maintenance and depreciation 2.9 2.9
Other expenses 9.6 9.4
Total operating and other expenses 41.4 30.8
Income from ordinary operations before tax 62.5 23.8
Provision for taxes 9.5 1.6
Net income for the year 53.0 22.2
Statement of income – year ended December 31, 2008 (NIS millions)
Classification of credit to the public and off-balance sheet credit risk by size of debtor* as of December 31, 2008
* Not including government-guaranteed credit to the Israel Electric Company that was granted from the State deposit which is supposed to be assigned to another party.
Amount of credit to debtor Number of
debtorsCreditCredit risk
NIS thousands NIS millions
Up to10340.1-
Between 10 and20330.5-
Between 20and40180.5-
Between 40and80191.10.1
Between 80and150171.70.2
Between 150and300325.61.2
Between 300and6004419.30.5
Between 600and1,2005038.62.4
Between 1,200and2,0002535.13.7
Between 2,000and4,0002560.87.6
Between 4,000and8,000417.24.1
Between 8,000and20,000774.013.3
Between 20,000and40,000238.030.1
Between 40,000and200,0003156.964.6
313449.4127.8
Overall credit risk* to the public by industry as of December 31, 2008 (NIS millions)
*Not including government-guaranteed credit to the Israel Electric Company.
Balance sheet credit risk
Off-balance sheet credit
risk
Overall credit risk to the
public
Annual expense in respect of the specific
allowance for doubtful debts
Balance of problematic debts
Agriculture2.50.12.6-2.1
Industry175.510.7186.27.5-138.7
Construction and real estate37.440.878.24.0-64.0
Electricity119.55.2124.7-39.7
Trade3.82.46.20.66.2
Hotels, guest houses and food4.32.26.52.6-6.4
Transportation and storage13.2-13.20.1--
Communications and computer services2.90.43.3-1.9
Financial services28.064.492.4-1.4
Other business services22.61.524.10.1-5.1
Public and communal services36.50.136.60.223.0
Private individuals3.4-3.4-0.3
Total449.6127.8577.413.5-288.8
Credit risk included in the various industries:
Settlement movements92.12.294.311.8-49.6
Local authorities and controlled entities2.2-2.2--
Assets and liabilities, by linkage bases as of December 31, 2008* (NIS millions)
AssetsUnlinked NIS
Index-linked NIS
US $Other currencies
Non-monetary
items
Total
Cash and bank deposits558.91.215.10.1-575.3
Securities-0.2--37.737.9
Credit to the public73.8235.185.912.8-407.6
Credit to Israeli government-2.8---2.8
Fixed assets----0.50.5
Other assets2.40.5--0.43.3
Perpetual deposits in Treasury--29.9--29.9
Total assets635.1239.8130.912.938.61,057.3
Liabilities
Deposits of the public17.59.10.1--26.7
Government deposits-225.997.2--323.1
Perpetual deposit0.1----0.1
Other liabilities24.637.30.91.1-63.9
Non-participating preference shares
--335.8--335.8
Participating preference shares--203.6--203.6
Total liabilities42.2272.3637.61.1-953.2
Difference592.932.5-506.7-11.838.6104.1
Forward transactions95.9-35.871.611.5---
Total497.03.3435.1-0.338.6104.1
* Not including government-guaranteed credit to the Israel Electric Company that was granted from the State deposit which is supposed to be assigned to another party.
Balances of credit* to the public in the financial statements:
December 31,Balance (NIS millions)
20024,059.6
20032,784.3
20041,826.1
20051,275.6
2006848.1
2007557.9
2008407.6
* Not including State-guaranteed credit to the Israel Electric Company to be assigned to another party.
Breakdown of credit by classification (NIS millions)
Balance sheet credit31/12/200831/12/2007
Non-income bearing22.169.7
Restructured24.431.5
Designated for restructuring8.517.3
Temporarily in arrears1.98.7
Under special supervision170.5181.7
Total balance sheet credit to problematic debtors
227.4308.9
Breakdown of credit by classification (cont.) (NIS millions)
Balance sheet credit31/12/200831/12/2007
Total balance sheet credit to problematic debtors
227.4308.9
Add: credit to debtors not classified as problematic *
222.0294.2
Total credit before general allowance for doubtful debts
449.4603.1
Add: Credit to the Israel Electric Company4,699.54,963.2
Less: General allowance for doubtful debts(41.8)(45.2)
Total credit in the financial statements 5,107.15,521.1
* Not including State-guaranteed credit to the Israel Electric Company to be assigned to the State.
Breakdown of credit by classification (cont.) (NIS millions)
* Most of the amount derives from letters of indemnification issued by the Bank in favor of the receiver appointed to realize the assets of debtors in legal proceedings. The letters of indemnification are in respect of receipts that were credited to debtor accounts in the Bank from the proceeds of the realized assets.
Off-balance sheet credit risk31/12/200831/12/2007
In respect of debtors classified as problematic*
61.4 *81.2 *
In respect of debtors not classified as problematic
66.482.4
Total off-balance sheet credit risk127.8163.6
Allowance for doubtful debts as of December 31, 2008(NIS Millions)
Specific allowance
General and supplemental
allowance
Total
Balance of allowance as of January 1, 2008572.645.2617.8
Provisions during the year4.1-4.1
Reduction of provisions9.1-3.4-12.5-
Collection of debts written off in previous years8.5--8.5-
Total amount carried to statement of income13.5-3.4-16.9-
Write-off of debts28.0--28.0-
Balance of allowance as of December 31, 2008531.141.8572.9
Of which an amount of the allowance that was not deducted from credit to the public
0.1-0.1
Balance of the credit line from the Bank of Israel (NIS millions)
December 31,Balance
20022,131.5
20032,091.2
20041,403.9
20051,033.7
2006761.5
2007481.2
2008-
Pro forma balance sheet after completion of the sales processon the basis of the December 31, 2008 financial statements (NIS millions)
1. Transfer of credit of Electric Company.2. Repayment of balance of perpetual deposit and redemption of D and DD preference shares (at rate of NIS 3.802 to the dollar).3. Receipt from the State of dividend in arrears in respect of D and DD shares held by the public.4. Payment of dividend in arrears on the D and DD shares held by the public.5. Cancellation of dividend in arrears in respect of preference shares held by the public and the State as a result of the sale.
Assets31/12/2008
12345Balance following changes
Cash and bank deposits575.3--14.614.6--575.3
Securities37.9-----37.9
Credit to the public5,107.14,699.5-
----407.6
Credit to the Israeli government2.8-----2.8
Fixed assets0.5-----0.5
Other assets3.3-----3.3
Perpetual deposits with the Treasury29.9-29.9-----
Total assets5,756.84,699.5-
29.9-14.614.6--1,027.4
Liabilities
Deposits of the public26.7-----26.7
Government deposit and perpetual deposit5,022.74,699.5-
----323.2
Other liabilities63.9-----63.9
Total liabilities5,113.34,699.5-
----413.8
Non-participating preference shares335.8-29.9-14.614.6-63.0-242.9
Participating preference shares203.6----35.0-168.6
Shareholders’ equity104.1----98.0202.1
Total equity (including preference shares) sold in the process
643.5-29.9-14.614.6--613.6
Total liabilities and equity5,756.84,699.5-
29.9-14.614.6--1,027.4
