Bank Leumi cancels bailout deal for billionaire after outcry

Debt-forgiveness plan for about $40.5 million owed by Nochi Dankner elicited an outpouring of anger from politicians, public

Nochi Dankner (photo credit: Moshe Shai/Flash90)
Nochi Dankner (photo credit: Moshe Shai/Flash90)

Bank Leumi on Friday aborted a deal to forgive part of billionaire Nochi Dankner’s debts after the plan stirred a public outcry.

Dankner’s Ganden Holdings owes the bank some NIS 500 million in total, and the deal to strike nearly a third of it — NIS 150 million (about $40.5 million) — from the bank’s ledgers elicited an outpouring of anger from politicians, pundits, and the public all week.

In its first response Wednesday to the outcry, Leumi suspended the deal for review by the Bank of Israel. On Friday, though — amid reports that outraged Leumi account holders were threatening to close their accounts in protest that a billionaire was having his debts forgiven while the average account holder would never receive such treatment — Leumi CEO Rakefet Russak-Aminoach abandoned the deal altogether, and said the bank would explore all possibilities to recover Dankner’s debt in full.

Russak-Aminoach said the arrangement had become unworkable because of developments relating to another potential investor in Ganden Holdings.

The capitulation was hailed by Labor leader Shelly Yachimovich as “a victory for the public.”

Dankner, who controls the IDB Group through Ganden, is worth over $1 billion, according to Forbes.

Earlier Wednesday, Finance Minister Yair Lapid and opposition head Yachimovich voiced their dissatisfaction over the planned agreement.

Lapid sent a personal request to Supervisor of Banks David Zaken, insisting that he conduct an inquiry into the complaints over the deal, Army Radio reported. The finance minister was said to be worried, not only about the debt itself, but also about the manner in which the public would react to the decision to forgive it.

Lapid noted that the trimming of debts for large companies seemed to be a recurring theme in recent years, and that such moves could hurt the public and the country’s economic stability.

Bank Leumi director Yedidya Stern told the radio station that the public needed to separate the individual from his business ventures, since the debt in question was not owed by Dankner but rather by his companies.

Writing on Facebook, Yachimovich said banks only erase people’s debts “in their dreams” — unless they’re Dankner.

The “difference between the average Israeli and those with means is discriminatory,” she stated.

Yachimovich demanded that the Bank of Israel issue clear orders and regulations regarding the ability of banks to forgive debts.

She also called on Zaken to investigate what she called “a conflict of interests,” saying the accountant in charge of overseeing Dankner’s company was the same accountant appointed by Leumi to oversee the deal with IDB.

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