A raft of banks in recent years have settled with the US authorities over running secret offshore accounts.

Hapoalim, the Israel-based bank, said last week that it intends to pay a total of $870 million to settle a US tax evasion probe.

The lender said in a statement that it had made “significant progress” in the tax investigation. As a result, it has provisioned for NIS897 million (about $250 million) in the fourth quarter of 2019, adding to amounts already put to one side. Adjusted net profit in 2019 totalled NIS2.778 billion in 2019, falling by 22.4 per cent on a year earlier. The figure excludes expenses linked to the US tax probe. The rate of net return on shareholders’ equity was 4.6 per cent in 2019, down from 7.1 per cent in 2018.

US authorities, including the Department of Justice and the New York Department of Financial Services, have been investigating accusations that the Israeli bank helped US clients evade taxes.

“The provisions for the investigation of the United States authorities have a substantial impact on the financial results of the bank for the year, but they will enable us to move forward with greater strength and expand our investments in development and in adapting Bank Hapoalim to the banking of the future and to the challenges of tomorrow, and to coping with the new challenges of the present, which are already taking a toll on the business sector in Israel,” Oded Eran, chairman of the bank, said.

The settlement would be a deferred prosecution agreement, the bank was quoted by Reuters as saying last week (18 March). Its subsidiary in Switzerland will sign a plea agreement with the DOJ relating to its business with its US customers, the report said. 

In 2014, Hapoalim’s Israeli rival, Bank Leumi agreed to pay $400 million to settle two separate investigations into whether it helped US clients evade taxes. 

In recent years a raft of Swiss private banks and other financial institutions have settled such cases with the DoJ. An irony is that the US is, unlike scores of developed countries, not a signatory to the Common Reporting Standard, a global pact to share information to hunt tax dodgers.