Exposure to Foreign Countries

Bank of Israel
Banking Supervision Department Policy

Fax: 02-6524590 Tel: 02-6552475 P.O.B. 780, Jerusalem 91007

Jerusalem, 10 Tevet 5773
January 2, 2013

Circular No. 06-2360

To:
Banking Institutions, Credit Card Companies

Subject:
Exposure to Foreign Countries (Quarterly)
(Reporting Instruction No. 834)

Introduction

1. Further to Circular No. 2331 dated March 25, 2012, which amended the definitions in Annex B to the Management Review, the Reporting Instruction No. 834 (Exposure to Foreign Countries) has been amended.

2. Additionally, Reporting Instruction No. 803 (Banking Reports) has been updated.

Amendments to the Instructions

Reporting Instruction No. 834 – Exposure to Foreign Countries (Quarterly)

3. In Section 3 (Definitions), replace:
   "Problematic Commercial Credit Risk" with "Problematic Credit Risk";

4. In Section 4 (Guidelines for Filling the Report), replace:
   "Net balance after accounting write-offs, before impairment provisions for credit losses" with "Net balance after accounting write-offs, before impairment provisions for credit losses, before the effect of collateral permissible for deduction for the borrower's and the borrower group's liabilities, variable, not";

5. The following changes apply to Annex 01 (Consolidated – Exposure to Foreign Countries):

a. In rows 13 and 19, delete the word "Commercial";

b. In Note 2', replace the ending "Net balance after accounting write-offs, before impairment provisions for credit losses" with "Before the effect of impairment provisions for credit losses, before the effect of collateral permissible for deduction for the borrower's and the borrower group's liabilities";

c. Delete Note 4' (now Note 5') and Note 5' (now Note 6');

d. In Note 5' (now Note 6'), replace the ending "Including housing loans for which an impairment provision exists based on delinquency depth, for which no impairment provision exists based on delinquency depth" with "Including housing loans for which an impairment provision exists based on delinquency depth, for which no impairment provision exists based on delinquency depth, more than 90 days";

The references in the Annex have been updated accordingly.

6. The amendments to this Instruction take effect as of December 31, 2012.

Questions and Clarifications

7. For questions or clarifications regarding the tables in Reporting Instruction No. 803, please contact the Reporting Supervision department.

File Update

8. The following pages in the "Reporting Instructions" file have been updated for the Banking Supervision Department:

Page to Insert | Page to Remove
(1/13) [74] 803-1 | (8/12) [73] 803-1
(1/13) [77] 803-2 | (8/12) [76] 803-2
(1/13) [5] 803-3 | (8/12) [4] 803-3
(1/13) [3] 834-1 | (12/10) [2] 834-1
(1/13) [4] 834-2 | (9/11) [3] 834-2
*(8/12) [4] 897-51 | (8/12) [4] 897-51
(1/13) [3] 897-52 | (11/12) [2] 897-52

• This page was reprinted but not updated, following the transition to double-sided printing.

Respectfully,

Orr Sofer
Deputy Superintendent of Banks

---

Reports Applicable to All Banking Institutions, Credit Card Companies

Report Name | Responsible Person | Submission Deadline | Report Name | File Name 804 (Frozen) (Monthly) (Banking Communications) M1501VX | Shavit Gvut | Within 3 days from the date of change | 804A (Monthly) (Automated Devices) | 806 (Monthly) (Land Bank Industry Credit) M4601VX | Haas Zehava | 30 days after the end of the reported month | 807 (Continuous) (Senior Staff, Directors, Data Update) | Mor Varda | At the time of update | 808 (Immediate) (Fraud and Embezzlement) | Mor Varda | 7 days from the date of the event | 809 (Quarterly) (Additional Provision for Supplied Debts) M0101VX | Drori Nissim | 4 business days from the date of the Financial Report publication | 810A (Quarterly) (Foreign Credit and Risk Owners) ZPTMLOVM | Koriat Tanya | 30 days after the end of the quarter | 810B (Quarterly/Monthly) (Estimate of Impact of Theoretical Changes on Bank's Profit/Loss) M2001VX | Mor Varda | Monthly: 14 days after the end of the month; Quarterly: 14 days from the date of the Financial Report publication | 810C (Quarterly) (Credit for Financing Acquisition of Control Means in Institutions) ZPTMLVHA | Yamini Shlomo | 30 days after the end of the quarter | 810D (Quarterly) (Large Credit Exposures) ZPTMLVGA | Dganit Harel | 30 days after the end of the quarter | 810E (Quarterly) (Credit Exposures) ZPTMLVGA | Dganit Harel | 30 days after the end of the quarter | 813 (Quarterly) (Control Percentages of Related Institutional Investors in Banks) | Mor Varda | In the months of March, June, September, December, on the 20th | 814 (Monthly) (Derivatives) M0201VX | Pearl Shaul | 30 days after the end of the reported month | 815 (Semi-Annual) (Related Persons) M5701VX | Pearl Shaul | 2 weeks from the date of the Financial Report publication | 816 (Annual) (Investment Companies) M5401VX | Shavit Gvut | 2 weeks from the date of the Annual Financial Report publication | (Annual) (Control Means in Banking Institutions) | Koriat Tanya | April 15 | (Immediate) (Change in Control Means in Banking Institutions) | Koriat Tanya | 7 days from the date of the change | 819 (Annual) (Restrictions on Holdings in Real Estate Institutions) M5301VX | Shavit Gvut | 2 weeks from the date of the Annual Financial Report publication | 819A (Immediate/Advance Notice) (Immediate Acquisition of Control Means in Real Estate Institutions) | Shavit Gvut | 821 (Monthly) (Balance Sheet) M1101VX | Dganit Harel | 30 days after the end of the reported month | 822 (Monthly) (Effective Cost Calculation Data for Non-ILS Indexed Sector) M3701VX | Pearl Shaul | 20 days after the end of the reported month | 823 (Monthly) (Public Deposits and Loans Granted to the Public During the Month) M3901VX | Haas Zehava | 4 business days after the end of the reported month |

Reports Applicable to All Banking Institutions, Credit Card Companies

Report Name | Responsible Person | Submission Deadline | Report Name | File Name 825 (Monthly) (Reports Transferred to the Anti-Money Laundering Authority) M2201VX | Mor Varda | Within one week after the end of the reported month | (Monthly) (Liquidity Risk) M2701VX | Yamini Shlomo | 10 business days after the end of the reported month | (Quarterly) (Liquidity Risk) M2501VX | Yamini Shlomo | 4 business days from the date of the Financial Report publication | (Quarterly) (Liquidity Risk) | Shavit Gvut | 10 business days after the end of the reported month; 4 business days from the date of the Financial Report publication | 828 (Quarterly) (Fees for Banking Services) M7101VX | Shavit Gvut | 4 business days from the date of the Financial Report publication | 829 (Quarterly) (Fees for Credit Card Services) M7201VX | Drori Nissim | 4 business days from the date of the Financial Report publication | 830 (Weekly) (Internal Pricing Interest Rate by Maturity Period) | Yamini Shlomo | By 12:00 on every Monday | 831 (Quarterly) (Total Credit Risk Distribution by Economic Sector) M5101VX | Haas Zehava | 4 business days from the date of the Financial Report publication | 832 (Quarterly) (Bank Profit and Loss) M4501VX | Shavit Gvut | 4 business days from the date of the Financial Report publication | 833 (Quarterly) (Banking Institution Exposure to Foreign Financial Institutions) M4701VX | Weiss Moti | 4 business days from the date of the Financial Report publication | 834 (Quarterly) (Exposure to Foreign Countries) M6301VX | Koriat Tanya | 4 business days from the date of the Financial Report publication | 838 (Quarterly) (Capital Adequacy Measurement) M6101VX | Yamini Shlomo | 4 business days from the date of the Financial Report publication | 846 (Semi-Annual) (Branch Detail) SNIFXXXX | Mor Varda | 4 business days from the date of the Financial Report publication | (Quarterly) (Financial Report) M9001VX | Weiss Moti | (Annual) (Financial Report) M9801VX | Weiss Moti | (Quarterly) (Financial Report of Credit Card Companies) M8701VX | Shavit Gvut | (Annual) (Financial Report of Credit Card Companies) M8801VX | Shavit Gvut | 855 (Annual) (Bank Profit and Loss) M4201VX | Shavit Gvut | 4 business days from the date of the Annual Financial Report publication | 856 (Quarterly/Annual) (Sectoral Activity Areas) M9201VX | Koriat Tanya | Quarterly: 45 days after the end of the reported month; Annual: 60 days after the end of the reported month | 869 (Immediate/Quarterly) (Credit Cards) M4001VX | Drori Nissim | Quarterly: 4 business days from the date of the Financial Report publication; Immediate: 2 reports - one for changes in credit terms, one for credit | 876 (Monthly) (Housing Loans) M4301VX | Yamini Shlomo | 20 days after the end of the reported month | 877 (Monthly) (Housing Loans - Interest Information) M3301VX | Drori Nissim | 4 business days after the end of the reported month | (Daily) (Emergency Reporting) HERUM | Weiss Moti | (Quarterly/Monthly) (Reporting
on Depositors Over 20) | Shavit Gvut | At the time of update |

Banking Supervision Department
The files are located in the safe at the Bank of Israel. The file name changes according to the latest version of the report, with the letter "X" replaced by the file number.

Page 803-1

Banking Supervision Department

Page 803-2

Banking Supervision Department

Page 803-3

Banking Supervision Department

Name | Phone | Fax | Email
Dganit Harel | 02-6669121 | 02-6552472 | dganit.harel@boi.org.il Varda Mor | 02-6669439 | 02-6552439 | varda.mor@boi.org.il Zehava Haas | 02-6669432 | 02-6552432 | zehava.haas@boi.org.il Ifat Segv | 02-6669437 | 02-6552437 | ifat.segev@boi.org.il Moti Weiss | 02-6669480 | 02-6552480 | moti.weiss@boi.org.il Nissim Drori | 02-6669444 | 02-6552444 | nisim.drori@boi.org.il Shaul Pearl | 02-6669455 | 02-6552455 | shaul.pearl@boi.org.il Shlomo Yamini | 02-6669459 | 02-6552459 | shlomo.yemini@boi.org.il Tanya Koriat | 02-6669427 | 02-6552415 | tanya.koriat@boi.org.il

Page 834-1

Reporting Instruction No. 834 – Exposure to Foreign Countries (Quarterly)

1. This Instruction applies to all banking institutions, except for joint venture companies with foreign banks.

a. The report is prepared on a consolidated basis.

2. The report must be submitted within four business days from the date of publication of the Annual or Quarterly Financial Report.

3. The report consists of Annex 01 (Consolidated – Exposure to Foreign Countries).

4. Reporting must be done via computer communication technology, using the internet, to the format attached hereto. Israel.

5. Any term in this Instruction shall have the meaning given to it in the Reporting Instructions for the Public, as defined in Section 2(z), unless otherwise stated.

6. "Problematic Credit Risk" shall have the meaning given to it in the Reporting Instructions for the Public.

7. "Impaired Debts" shall have the meaning given to it in the Reporting Instructions for the Public.

8. The report shall include, separately for each foreign country, the total amount of all off-balance sheet and on-balance sheet exposures, after accounting write-offs, before the effect of impairment provisions for credit losses, before the effect of collateral permissible for deduction for the borrower's and the borrower group's liabilities, exceeding 50 thousand NIS.

9. Report using the codes specified in Annex A to Reporting Instruction No. 833:

a. Row 02 - "Country Code" - according to Reporting Instruction No. 833 "Banking Institution Exposure to Foreign Financial Institutions";

b. Row 03 - "Country Classification". If the country is classified as "Less Developed Country (LDC)", mark code 1; otherwise, mark code 2.

c. Row 04 - "Country with Liquidity Problems". If the country is classified as such, mark code 1; otherwise, mark code 2.

d. Row 05 - "Current Country Rating". Indicate the rating of the rating agency used. For the purpose of applying Reporting Instruction No. 203 "Banking Management – Capital Adequacy Measurement - Standard Approach - Credit Risk".

Page 834-2

Annex 01 – Consolidated – Exposure to Foreign Countries

Country A | Country B
04 "Countries with Liquidity Problems"
3 Governments 06
07 Banks
08 Others
23 Maturity up to 1 year
24 Maturity over 1 year

(1) Final risk basis, after the effect of eligible collateral, guarantees, and liquid derivatives.
(2) After accounting write-offs, before the effect of impairment provisions for credit losses, before the effect of collateral permissible for deduction for the borrower's and the borrower group's liabilities. (3) Governments, official institutions, and central banks. (4) Credit risk in off-balance sheet financial instruments calculated as per balance sheet exposure limits. (5) Impaired credit risk, substandard or special supervision, including housing loans for which an impairment provision exists based on delinquency depth, for which no impairment provision exists based on delinquency depth, more than 90 days.

Exposure
On-Balance Sheet
Country Name
Country Code
Country Classification
Current Country Rating
(LDC) "Less Developed Countries"
Impaired Debts: Indicate

Specific Basis
Net Balance After Deductions for Local Liabilities

2 On-Balance Sheet Exposure
Exceeding Limit
2 On-Balance Sheet Exposure
Institution's Branches
Foreign Country Bank
Local Residents
Before Deduction of Local Liabilities

(9-10=11) Net After Deduction
(6+7+8+11=12) Total 2 On-Balance Sheet Exposure

5 Problematic On-Balance Sheet Credit Risk: Indicate

(12-15=16) Total On-Balance Sheet Exposure After Deductions for Specific Basis Impairment Provisions for Credit Losses

Specific Basis Impairment Provisions for Credit Losses Balance

4 Off-Balance Sheet Exposure
2 On-Balance Sheet Exposure Exceeding Limit
2 On-Balance Sheet Exposure Total

5 Problematic On-Balance Sheet Foreign Credit Risk: Indicate

Specific Basis Impairment Provisions for Credit Losses Balance Attributed to Off-Balance Sheet Credit Risk

(18-20=21) Total Off-Balance Sheet Exposure After Deductions for Specific Basis Impairment Provisions for Credit Losses

Specific Basis Impairment Provisions for Credit Losses Balance

Page 897-52

Annex G - Update Key

Page to Insert | Page to Remove | Subject | Circular No. | Date
*(9/11) [11] 877-6-7 | (9/11) [11] 877-6-7 | Reporting Instructions | 2345 | 30.08.2012 (8/12] [12] 877-8) | 9/11] [11] [877-8 | (Continuation) (Reporting Supervision) | Various Versions | 887-1-5 (8/12) [4] 897-51 | (5/12) [3] 897-51 | (8/12) [1] 897-52 | --------------------- | (11/12) [10] 876-1 | (8/12) [9] 876-1 | Housing Loans | 876 | 2350 | 27.11.2012 *(8/12) [9] 876-2 | (8/12) [9] 876-2 | *(8/12) [9] 876-3 | (8/12) [9] 876-3 | (11/12) [10] 876-4-6 | (8/12) [9] 876-4-6 | *(8/12) [9] 876-13 | (8/12) [9] 876-13 | (11/12) [1] 876-14 | ------------------ | *(8/12) [4] 897-51 | (8/12) [4] 897-51 | (11/12) [2] 897-52 | (8/12) [1] 897-52 | (1/13) [74] 803-1 | (8/12) [73] 803-1 | Exposure to Countries | 834 | 2360 | 02.01.2013 (1/13) [77] 803-2 | (8/12) [76] 803-2 | Foreign (1/13) [5] 803-3 | (8/12) [4] 803-3 | (1/13) [3] 834-1 | (12/10) [2] 834-1 | (1/13) [4] 834-2 | (9/11) [3] 834-2 | *(8/12) [4] 897-51 | (8/12) [4] 897-51 | (1/13) [3] 897-52 | (11/12) [2] 897-52 |

• This page was reprinted but not updated, following the transition to double-sided printing.