December 10, 2014 / 1:51 PM / 5 years ago

UPDATE 1-Israel's Leumi sees 1.4 bln shekel U.S. tax settlement by mid-Jan

* Leumi has provisioned more than 1.4 bln shekels for settlement

* Leumi legal advisor: 200 more banks to be investigated by U.S. (Adds comments from Leumi/banking supervisor, background)

By Steven Scheer

JERUSALEM, Dec 10 (Reuters) - Leumi, Israel’s second largest bank, expects to pay 1.4 billion shekels ($355 million) to settle a U.S. investigation into whether it helped American clients evade taxes, mainly through its private bank in Switzerland.

The process is expected to be completed by the middle of January 2015, if not by the end of this year, Leumi’s legal adviser Hanan Friedman told parliament’s economics committee on Wednesday, according to a statement from the committee.

A source told Reuters last week that Leumi would likely pay $270 million to the U.S. government and another $130 million to New York State’s Department of Financial Services (DFS), which regulates certain banks in the state.

“The bank’s management believes, after testing all scenarios, that it is correct to reach a settlement with the authorities, just like the world’s largest banks did,” Friedman said. “Our job is to reach a deal that is the best for Bank Leumi, and the best is the least expensive and fastest.”

He noted that 100 banks have been investigated so far and another 200 are expected to be probed.

Leumi has been negotiating with U.S. authorities for months and has already set aside more than 1.4 billion shekels to settle with the U.S. Justice Department and New York DFS.

“After the (Leumi) investigation is completed, we will examine ... the responsibility of the bank’s managers,” David Zaken, Israel’s banking regulator, told the panel.

Financial daily Calcalist reported on Wednesday that as part of the final settlement Leumi’s U.S. activities will be supervised by U.S. regulators. The bank has started the process of transferring client assets in its Swiss private banking business to Julius Baer.

U.S. efforts to crack down on Americans using offshore banks to evade taxes have largely focused on banks in Switzerland, but banks in other countries are also under scrutiny.

The investigation of Israeli banks started in 2011, two years after Swiss bank UBS was fined $780 million and had to hand over client data to the United States. In May, Credit Suisse agreed to pay more than $2.5 billion in penalties for helping Americans dodge taxes.

Hapoalim, Israel’s largest bank, and Mizrahi-Tefahot, the fourth largest, are also being investigated.

$1 = 3.9464 shekels Additional reporting by Ari Rabinovitch and Tova Cohen; editing by David Clarke

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