Antitrust Will Object to Leumi Sale to Nochi Dankner

The Antitrust Commission will object to Nochi Dankner's request to purchase control of Bank Leumi and will make every effort to stop it, according to industry sources.

Antitrust Commissioner Ronit Kan has made it clear to Dankner in the past that she sees a very serious problem with IDB, controlled by Dankner, buying a large bank. She has said that she will not necessarily allow such a move when it is brought for her approval.

In a 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 are related to granting credit and the bank's disclosure 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 percent holding. The state still holds 10 percent, Cerberus-Gabriel owns 10 percent, and an additional 10 percent 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 percent of Leumi would cost around $500 million, and he would then be able to use the other $500 million to buy out Eliahu.