Industrial Development Bank Up for Sale

Bank Leumi told the Finance Ministry and the Bank of Israel that it is interested in buying Industrial Development Bank's asset and liabilities portfolios, which went up for sale yesterday, on the condition that it can also buy Union Bank.

Leumi CEO Galia Maor informed Accountant General Nir Gilad in a meeting last night on the future of the failing state-owned bank's operations. The treasury and central bank saw the request as an attempt to take advantage of the situation and refused to discuss it.

Leumi yesterday claimed that Maor did not make the bank's purchase of Industrial Development's operations contingent on being allowed to buy Union. Leumi's spokesman confirmed that the bank is interested in Union Bank, but refused to comment on statements made in the meeting, arguing it had been a closed-door affair.

The treasury and Bank of Israel decided yesterday to sell Industrial Development Bank operations to another bank. The value of the banking operations will be assessed over the next four to five months, after which a tender will be held for their sale. Bank Hapoalim, Bank Leumi and Mizrahi Bank are considered likely contenders for the portfolio. First International, Union Bank and Israel Discount Bank do not plan to bid at this stage. After the sale the bank will close.

Industrial Development Bank announced a projected NIS 100 million quarterly loss two weeks ago, the equivalent of 10 percent of its equity. This, in addition to the NIS 64 million loss in the preceding quarter, stems from its problematic credit in recent years, particularly loans to Gad Zeevi for his 20 percent stake in Bezeq, cable television providers Tevel and United Pan-Europe Communications (Nasdaq:UPCOY), and the crumbling Peled-Givony group.