The Finance Ministry is not expected to let Koor Industries buy Clal Insurance because Koor does not meet the ministry's requirements to be a controlling owner of an insurer.

Still, Nochi Dankner's debt-ridden conglomerate IDB Development said on Thursday it wanted to sell part or all of its majority stake in Clal Insurance to Koor Industries. Koor is also a subsidiary of the IDB group.

IDB, a unit of IDB Holding, said any deal would be valued by an independent assessor. The deal would be a way to free up Koor's large cash holdings to pay off the debts of IDB, which faces a possible going-concern warning and a debt restructuring agreement with bondholders. (See accompanying story. )

Until April, there were no clear rules defining who could receive approval to own an insurance company or a bank in Israel. But on April 18, the supervisor of banks at the Bank of Israel, David Zaken, and Oded Sarig, the treasury's insurance commissioner, presented a draft they had spent more than a year on and asked for public comment.

The idea was to let the regulators act transparently in approving - or rejecting - such requests. The document has still not received legal status, as the central bank and treasury have received a raft of written comments from interested parties, and no final version has been published.

But the Finance Ministry told TheMarker on Thursday that while the document is still a draft, it represents the ministry's policy if it must decide on the sale of an insurance company.

Koor does not meet a number of requirements. The new rules ban pyramid control of more than two levels for an insurance company. Koor's ownership would place six such levels between Dankner and Clal. Koor also holds significant speculative holdings, such as a stake in Swiss bank Credit Suisse.

The new rules require the owner of an insurance company to avoid any speculative stake that could cause it significant losses. In addition, the rules state that a holding company with a controlling stake in an insurance firm must have at least 70% of its balance sheet as shareholder equity. At the end of the third quarter, Koor had only 32.3% of its balance sheet as shareholder equity.

Only one of the two companies in the controlling-ownership pyramid is allowed to raise debt. In case in question, all six firms in Dankner's pyramid have debt outstanding. The new owner would also have to demonstrate financial stability, though IDB and Dankner are far from being able to meet this requirement.

Clal Insurance, which has a market value of NIS 3 billion, is 54.97% owned by IDB Development. IDB also holds 13.35% of Koor and indirectly holds another 70.11% through Discount Investment Corp. Koor, which holds about 2.4% of Credit Suisse and 40% of agrochemicals maker Makheteshim Agan Industries, has yet to discuss IDB's proposal.