Dankner's Role in Bank Hapoalim Gets Second Evaluation

The Bank of Israel plans to re-evaluate the approval granted to the Dankner family for acquiring control of Bank Hapoalim in 1997, in light of structural changes in the family's holdings. The main change is the transformation of Ellern Investments into a holding company for the group, whose holdings include Israel Salt Industries, which is also a partner in the controlling group of Bank Hapoalim.

Ellern has not yet submitted a request to the Bank of Israel to approve the deal, but the central bank is preparing to reassess the Dankners' situation because the expected restructuring in the group would constitute a significant change in the controlling ownership of Bank Hapoalim.

The permit given to the Dankner group in 1997 was based on a review of the ownership structure of Israel Salt Industries. The central bank will now conduct a similar study of Ellern. Among other things, the bank will be looking at whether Ellern has sufficient capital to acquire control of Bank Hapoalim. The Bank of Israel requires the controlling owners of banks to have capital equal to twice the purchase price of the bank's shares, so that it can inject additional capital into the bank if needed.

If Ellern goes through with the expected acquisition of Israel Salt Industries, the deal would leave the 11.6 percent of Bank Hapoalim's share capital (25 percent of the controlling share) in the hands of three Dankner households. When the bank purchase was approved in 1997, six Dankner households were involved. The Bank of Israel will also be interested in considering the implication of this narrower distribution of ownership within the group.

Under the restructuring plan, Ellern Investments is to acquire 57 percent of Dankner Investments for $51 million and 55 percent of Dor Chemicals for $36 million, while the Ellern Holdings subsidiary is to acquire 61 percent of Israel Salt Industries for $116 million.

The controlling owners of Ellern will be the Abraham family, Shmuel Dankner and the Genio family, which, together, will have a 60-percent share of the company.