Companies in Nochi Dankner's IDB group announced yesterday that their combined holdings in each of Bank Leumi and Bank Hapoalim push their stakes past 5%. They don't mean to keep all these shares, though.
The companies involved, which include Clal Insurance Pensions and Finance Group, Clal Finance and Epsilon Investment House, state that they intend to reduce their holdings in the banks to less than 5%.
Owning more than 5% of a bank requires the approval of the Bank of Israel, which IDB hasn't sought.
A similar situation has developed at Delek Group, whose companies Phoenix Holdings and Excellence Nessuah Investment House became substantial shareholders in three banks without the central bank's approval. The Delek Group companies have not unloaded their excess bank shares and are awaiting the Bank of Israel's decision on their request to retain their holdings.
The Delek Group companies became substantial shareholders in Hapoalim and Bank Dexia Israel at an undisclosed time, and only last month notified the public of their interests in the banks, citing lack of coordination between the group companies as the reason for the delay.
Rather than reduce their holdings, the companies asked the Bank of Israel to approve their continued ownership of an interest in the banks, on the grounds that holdings in the banks bought through ETFs should be exempt from the 5% rule.
To elaborate, the Delek companies are asking the Bank of Israel not to count shares in banks purchased via exchange-traded certificates managed by Excellence. The reason for this request is that ETFs increase their holdings in the banks indiscriminately when the public buys ETFs that track the indices that include banks.
While Delek waited for the Bank of Israel's ruling, its companies last week became substantial shareholders in Leumi, too.
Clal Insurance and Clal Finance also became substantial shareholders in the banks due to such purchases by their ETF company, Mabat.
Senior players in the insurance sector are pressuring the Bank of Israel to allow the insurance companies to increase their holdings in the banks to about 10%, without the special permit required of other shareholders whose holdings exceed 5%.
In the meantime, however, apart from Delek Group and IDB, no other group of companies owns more than 5% of any of the banks, and if their holdings do exceed that figure, the companies quickly sell shares to reduce their stakes to within the legal limits.
The banks are not the only enterprises for which Delek Group companies need the central bank's approval for owning a substantial stake. The companies own more than 5% of Oil Refineries, El Al Airlines and the Ayalon and Menora-Mivtachim insurance companies. No word has been received concerning the latter three companies, but the Government Companies Authority has turned down Delek Group's request for approval to own more than 5% of Oil Refineries, and last week Delek Group announced that Delek Investments and Properties, Phoenix and Excellence will have to sell their excess shares. No date has been set, however, for the sale of these shares, by either the authorities or Delek Group.
Who will be affected by the sale of these shares? The shares purchased by Excellence and Phoenix were bought with money belonging to the owners of pension and other investment funds that are managed by the two companies. Some of the excess shares were bought by the Delek Group itself. Now Delek Group will have to decide exactly whose shares to sell. Selling the holdings of the fund owners could cause them damage, but likewise, selling the Delek Group's holdings could incur losses for it.