Bank Hapoalim to sell Miami portfolio to Safra Bank

Bank Hapoalim, Israel’s largest lender, said on Sunday it has entered into a deal for the sale of its international private banking business in Miami to Safra National Bank of New York for around $16.5 million.

The private business portfolio in Miami manages assets totaling about $2 billion, Bank Hapoalim said in a filing with the Tel Aviv Stock Exchange.

Customers and some of the client service teams of Hapoalim’s Miami branch will be transferred to Safra bank, Hapoalim said. The transfer is expected to take place at the end of March 2017, and the branch will halt its international private banking operations. The continued activities of the branch will be reviewed in the future, the filing said.

The sale is part of an extensive review Bank Hapoalim has undertaken regarding its international private banking activity, in light of changes in regulation and the business environment that have increased the bank’s operational costs stemming from these businesses, the bank said. The lender will also close its subsidiary in Uruguay, Hapoalim Latin America S.A., and its representative offices in Latin America, the filing said.

Bank Hapoalim Switzerland will continue its international private banking operations mainly for Israeli and European clients. Its work with Latin American and Russian customers will be “significantly trimmed,” the filing noted, which will lead to a “material decline” in client assets held in Bank Hapoalim Switzerland.”

Hapoalim remains the only Israeli bank with a Swiss subsidiary that has any significant activity, the bank said in a separate statement. The bank will continue to develop and expand its commercial banking activities in the US through its New York branch, the statement said.

The move comes as Hapoalim is undergoing a US tax probe, in which US regulators are investigating whether the bank helped American clients evade US taxes. In October Hapoalim said it would make a $70 million provision for settling the case, in addition to the $50 million the lender had already earmarked for the case.

Bank Leumi Le-Israel Ltd., Israel’s second largest lender, paid $400 million in fines in 2014 to settle US investigations.

The Safra deal is subject to regulatory approvals.

“This acquisition is a logical extension of Safra National Bank of New York’s private banking business for Latin America, where it has been providing premier private banking and financial services to high net worth clients for more than 30 years,” J. Safra Group said in a separate statement. “With this transaction, Safra National Bank of New York and its subsidiary, Safra Securities, LLC, further strengthen their private banking business and the global wealth management capabilities of the J. Safra Group.”