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Israel's Bank Leumi 'close to deal' over U.S. tax probe

JERUSALEM, June 8 (Reuters) - Bank Leumi, Israel's second largest lender, said on Sunday it was close to reaching an agreement with the U.S. Department of Justice, which has been investigating possible tax evasion by the bank's American clients.

The bank said it was setting aside an extra 460 million shekels ($130 million), bringing its total provision for the impending settlement to about 950 million Israeli shekels ($275 million).

The charge would "significantly impact" second-quarter results, it said in a statement.

Bank Leumi has urged U.S. clients to disclose information about their accounts to the U.S. authorities, who are investigating Leumi and other foreign banks in a wide-ranging campaign to crack down on Americans using offshore banks to evade taxes.

The U.S. effort has been focused largely on banks in Switzerland, but it has been known that banks in other countries, including Israel, are under scrutiny. Leumi said the investigation covered the period between 2002 and 2010.

"Leumi is the first bank in the Israeli banking system expected to reach an agreement with the U.S. Justice Department," the bank said. ($1=3.4574 shekels)

(Reporting by Ari Rabinovitch; Editing by Steven Scheer, Greg Mahlich)