State Changes Track, Wants Somebody to Control Bank Leumi

Following the controversy surrounding the appointment of a new chairman to Bank Leumi, the finance minister is thinking about reversing the state's official position on privatizing the bank. Instead of selling the state's shares via the Tel Aviv Stock Exchange to the general public, Yuval Steinitz is reconsidering the idea of selling its stake as a controlling interest to a single group. This is how the state's controlling interests in Hapoalim, Discount and the rest of the banks were sold: all have controlling groups.

Until recently, Steinitz liked the idea of having the general public, rather than a "tycoon," own Leumi. But the uproar over Leumi CEO Galia Maor's candidacy to join the board of directors highlighted the difficulty in having no clear owner. The finance minister is now leaning toward the idea of selling the controlling interest to a single party, after all.

Bank of Israel officials have also been revisiting their position on Leumi's privatization. However, they point out that the ship has sailed: The state has already sold most of its holdings and maintains just 11% of the bank's stock. That isn't enough to form a controlling interest which, they argue, must consist of at least 20% of the bank's share capital.

Even so, the supervisor of banks at the central bank, Rony Hizkiyahu, is trying to find somebody to buy a controlling interest - including by picking up shares on the stock market.

But this won't be easy. A 20% interest would cost the buyer about $1.1 billion, a tidy sum; and his net worth would have to be at least double that - meaning at least $2.2 billion. Moreover, the new owner would have to disclose all of his holdings and business relationships, which is enough of a deterrent to most.