Bank Leumi’s private banking operations reported a 34 per cent decline in net profit to $6.8 million in 2005 due predominately to difficulti...

Bank Leumi’s private banking operations reported a 34 per cent decline in net profit to $6.8 million in 2005 due predominately to difficulties in the bank’s Swiss operations. Leumi, which runs an extensive international private banking business in parts of Europe, and the US, reported a 14.7 per cent rise in assets under management to $22 billion at its private bank last year. The bank’s business in Switzerland recorded a loss of SFr16 million ($12.6 million) last year, largely due to provisions for a serious fraud which took place at the bank in the early part of the decade. The provisions, to cover client compensation, legal expenses, and other costs, amounted to SFr21.1 million in 2005, up from SFr10.7 million in 2004. So far the cost of the fraud, which led to widespread criminal investigations, has cost Bank Leumi more than SFr230 million. The bank also said the Swiss subsidiary was weighed down by extra IT costs in the wake of a major upgrading of systems. Assets under management at the private bank’s Swiss operations, which includes trust deposits, rose 18.5 per cent to SFr6.4 billion in 2005. The Swiss private bank also opened a representative office in Hungary last year.