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Three years after buying a 9.7% stake in Bank Leumi, losses on investments made through fraudster Bernard Madoff are forcing the Cerberus-Gabriel Capital funds to sell the shares at a loss of about half a billion shekels.

In mid-December 2008, Gabriel Capital said it had to dissolve after investing most of its assets with Madoff. Until now the time frame of its divestiture hadn't been clear, however. Now it is - the tender for the Leumi shares closes at month-end.

Leumi's market cap is NIS 14.5 billion. Cerberus and Gabriel had paid NIS 2.5 billion. But their potential loss is capped at half a billion because of the NIS 540 million in dividends they've received from the bank.

The stock on the block is not controlling shares. Buying a controlling interest in Leumi requires obtaining the permission of the Bank of Israel. The government still controls Leumi: It never agreed to let Cerberus and Gabriel acquire a controlling interest.