(Updates with comment from Leumi official in third paragraph, analyst in last.)
Feb. 12 (Bloomberg) -- Bank Leumi Le-Israel Ltd. rose the most in more than two weeks after the board of the country’s largest lender by assets approved measures that will cut costs by as much as 400 million shekels ($108 million) a year.
The shares advanced 2.8 percent, the most since Jan. 26, to 12.28 shekels at the 5 p.m. close in Tel Aviv. Trading ended a half hour later today following a delayed open after a strike that shut the bourse for two days ended.
“We are looking to improve profitability at a time when the economic conditions in Israel are less good than in the past and world growth will also be low,” Koby Haber, vice president and head of the bank’s finance and economic division said by telephone. “Part of it also stems from an understanding that all the banks will be asked to improve their core tier 1 capital adequacy ratio, and the way to do this is via improved profitability,” he said.
Economic growth in the second half of 2011 slowed to 3 percent from 4 percent in the first six months of the year, the Bank of Israel said today. The central bank will increase the core Tier-1 capital adequacy ratio target from the current 7.5 percent to 11 percent by 2016, Globes reported, Oct. 4, without saying where it got the information.
“We will see all Israeli banks taking similar cost-cutting steps ahead of the Bank of Israel’s increased capital adequacy requirements,” Adi Scop, head of sales at I.B.I.-Israel Brokerage & Investments Ltd. in Tel Aviv, said today by phone.
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