6 October 2016
Offering Circular dated 30 July 2015 in respect of the USD 2,500,000,000 Global Medium Term Programme (the "Programme") of Hapoalim International N.V. (the "Issuer"), as amended, restated or supplemented from time to time (the "Offering Circular")
RE: Notification in respect of certain events affecting Bank Hapoalim B.M., the guarantor of the Issuer's obligations under the Programme
Terms used but not otherwise defined herein shall have the meanings ascribed to them in the Offering Circular.
The Issuer makes the following announcement in respect of Bank Hapoalim B.M., the guarantor of the Issuer's obligations under the Programme (the "Guarantor"):
On 5 October 2016, the board of management and board of directors of the Guarantor convened to discuss the estimation of the exposure of the Guarantor in connection with the investigation of U.S. Authorities regarding the business of the Bank Hapoalim group (the "Guarantor Group") with US clients. This followed an additional meeting held on Friday, 30 September 2016 between representatives of the Guarantor and its external counsel and representatives of the U.S. Department of Justice ("DOJ"). During that meeting there was, among others, an initial discussion regarding certain possible methods to formulate an arrangement between the Guarantor Group and the DOJ. The initial discussion also included possible principals of calculating certain components that could form a part of the amount that the Guarantor Group might pay to the DOJ as part of an agreed resolution of the matter, if and when the parties are able to reach an agreement.
Following the meeting, and the matters discussed therein, according to a preliminary and rough estimate, the Guarantor expects to increase the provision regarding this issue in a sum denominated in Israeli new shekels ("ILS") equal to approximately USD 70 million (which shall be added to the provision in the sum of USD 50 million that was made in the past), so that the total provision sum will be a sum in ILS equal to USD 120 million. A provision accordingly will be included in the Guarantor's financial statements for the third quarter of 2016, which may materially impact on the Guarantor's results for that quarter. The Guarantor will continue to collect data and to conduct calculations on the basis of the above and its future discussions with the U.S. Authorities.
The above does not relate to the ongoing review by the New York Department of Financial Services (the "NYDFS"), with respect to which there is no new information that could change the Guarantor's inability to assess the exposure due to the uncertainty.
Due to the uncertainty which still exists, including with respect to additional components which the Guarantor might be required to pay for as part of an arrangement with the DOJ, and which are not included in the abovementioned estimation, it is possible that the results will eventually be substantially different than the above provision amount. Additionally, the provision does not constitute an admission on behalf of the Guarantor of any claim that could be brought against the Guarantor Group by the US authorities.
For further information please contact:
Berwin Leighton Paisner LLP
Direct Dial: +44 (0) 20 3400 2291
Email: [email protected]
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