TEL AVIV, March 24 (Reuters) - Bank Hapoalim, Israel’s largest bank, on Thursday said it would take $68.5 million in provisions for U.S. tax evasion investigations in the fourth quarter and earnings would suffer as a result.
This would be in addition to $120 million Hapoalim has already set aside for this matter, in which U.S. authorities are investigating whether it helped American clients evade U.S. taxes at its Swiss unit.
“These events will lead to a significant reduction in the profit the bank will record in the fourth quarter of 2016,” Hapoalim warned in a statement to the Tel Aviv Stock Exchange.
The bank set aside $25 million to cover a potential settlement of the U.S. Department of Justice investigation.
In addition, it said it was instructed by the Bank of Israel to set aside a provision related to a separate investigation being carried out by the New York Department of Financial Services. Accordingly, it said it would set aside an additional $43.5 million in the fourth quarter.
Hapoalim has denied the allegations.
The bank said it would make a loan loss provision of 470 million shekels in the fourth quarter but did not provide details. In addition, it will pay 157 million shekels in an accounting measure related to a decrease in corporate taxes that will affect the entire banking sector.
Hapoalim’s main domestic rival Leumi paid $400 million in fines in late 2014 to settle two investigations into whether it helped U.S. clients evade taxes.
Hapoalim will report fourth quarter results on March 30. (Reporting by Tova Cohen; Editing by Cynthia Osterman)