Eisenstadt Mounts Bid for Discount Bank

Former U.S. undersecretary of state Stuart Eisenstadt is organizing a group of investors to compete for control of Israel Discount Bank, senior financial sources told Ha'aretz on Monday. Eisenstadt, who served as undersecretary for economic affairs in the Clinton administration, has in recent years been involved in mediating between Jewish organizations and Swiss banks on the Holocaust deposits affair. Eisenstadt is considered a friend of Israel and both his sons have lived and studied here in the past.

According to the sources, Eisenstadt is interested in recruiting major institutional investors to takeover the bank from the sate. Finance Minister Silvan Shalom has in the past supported finding a single buyer for the entire Discount Bank, rather than the sale of only Discount New York. Shalom believes the sale of the entire bank is a better move, as the sale of only the profitable New York unit would weaken the parent bank and make finding a buyer more difficult.

Edgar Bronfman's son, Matthew Bronfman, has expressed interest recently in buying Discount Bank in its entirety, but since his letter to the treasury expressing intent, there have been no developments. Bronfman is represented in Israel by former finance minister and attorney Yaacov Neeman, who is friendly with Eisenstadt.

Discount Bank continues to further the sale of all or part of Discount NY, despite the fact that MI Properties and the Finance Ministry have not approved the move. Discount chair Arie Mintkievitz was given the green light to carry out necessary inquiries to enable the sale, but was also asked to provide MI Properties and the treasury a detailed report on the planned use of the proceeds should the sale go through.

The treasury is concerned about Discount Bank's capital adequacy and hopes to resolve the issue quickly, although treasury officials have completely ruled out any possibility of the state injecting cash into the bank to up its capital-risk ratio.