Trustbuster Won't Let Nochi Dankner Buy Bank Leumi

His firm IDB is one of the biggest holding companies in Israel, and one of the biggest borrowers

The Antitrust Authority means to block Nochi Dankner's effort to buy a controlling interest in Bank Leumi, say industry sources.

Antitrust Commissioner Ronit Kan advised Dankner that she sees a very serious problem with his company IDB buying a large bank. She has warned that she will not necessarily allow such a move when it is brought for her approval.

IDB is the biggest holding company in Israel, with arms in every sector. It is also one of the biggest borrowers.

In conversation between the two, when Dankner was attempting to buy the controlling interest in Bank Hapoalim, Kan explained to Dankner that the problems she sees relate to lending, and the bank's possession of information relating to his competitors.

It seems that the Antitrust Commission has not changed its opinion, and if Dankner applies to purchase control of Leumi, Kan will try, in any way possible, to stop him.

The commission also explained its objection to the Knesset Finance Committee: In committee sessions, Kan has said that Dankner controls IDB, a consortium with extremely broad holdings in the Israeli economy. Most of his competitors receive credit from either Leumi or Hapoalim, or both of them and the banks hold information about the most sensitive details of their customers. Therefore, Dankner's control of one of these banks will give him access to such information and will harm competition.

Even if a competitor chooses in advance not to ask for credit from Dankner's bank, competition will still be harmed since this will limit his competitors' options for raising funds and their ability to negotiate better terms.

The antitrust authorities admit that the law does not relate directly to such cases as a concern buying a large bank, but the law does apply to preventing a sale that would limit competition.

In order to gain control of Leumi, Dankner would have to obtain at least a 20% holding. The state still holds 10%, Cerberus-Gabriel owns 10%, and an additional 10% belong to Shlomo Eliahu.

The obvious solution for Dankner is to purchase the state's remaining share and to ally himself with Eliahu.

Even though this is the obvious solution, it would surprise many if Dankner and Eliahu actually joined forces.

If Dankner can sell Clal Insurance, IDB officially announced on Friday to the stock market that it is negotiating to sell part of its control, then he would find himself with a billion dollars from the sale. 10% of Leumi would cost around $500 million, and he would then be able to use the other $500 million to buy out Eliahu.