The government has decided to sell its remaining shares of Bank Leumi. The state owns a 6.03% share of the bank, which is worth about 1.2 billion shekels ($345 million). The Knesset Finance Committee will have to approve the sale.
M.I. Holdings (State of Israel Properties), the government company that is in charge of the holdings in Leumi, wants to sell the shares in tranches within 12 months of receiving approval from the Knesset.
The head of M.I. Holdings, Finance Ministry Accountant General Michal Abadi-Boiangiu, handed the official request for the sale to Knesset Finance Committee chairman Nissan Slomiansky Wednesday afternoon.
M.I. Holdings said the timing of and the number of shares offered in each of the sales would be decided based on market conditions at the time.
Leumi shares trade at a relatively high discount on the book price, only 76%. The sale of the state’s shares at such a low multiple could send a message to Leumi shareholders — and the market —that the government does not see much chance for significant improvement in the bank’s share price and the profitability in the near future.
The shares are the last remnant from the era when the state controlled the banks. Israel’s banks were nationalized after the bank share crisis in 1983. Over the years the government gradually sold off its holdings in the banks, but never managed to sell a controlling interest in Leumi. The state has gradually sold off its shares in Leumi since 2005, mostly through the capital markets.
A change in the banking law in March 2012 prescribed rules for the management of a bank without a controlling shareholder; and in practice paved the way for the state to give up its standing as the bank’s largest shareholder — and now allows the public to control the bank through a mechanism of a public committee responsible for nominating directors.
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