The Bank of Israel is continuing to press Bank Hapoalim (LSE:BKHD; TASE:POLI) to sell its holding in Bank Otsar Hahayal Ltd.. The Bank of Israel announced yesterday that Bank Hapoalim’s permit for keeping its controlling interest in Bank Otsar Hahayal expired at the end of 2005, and it therefore notified Bank Hapoalim that it illegally owned a banking corporation. Governor of the Bank of Israel Prof. Stanley Fischer gave Bank Hapoalim a 35-day extension to sell the controlling interest in Bank Otsar Hahahayl, under article 35 of the Banking (Licensing) Law (5741-1981). Bank Hapolaim owns 66% of Bank Otsar Hahayal, and Hever (the IDF and security forces servicemen and pensioners NGO) owns 24%.
The Bank of Israel said that in view if the severe ramifications of activating article 35, Fischer would give Bank Hapoalim an opportunity to plead its case and to consult with the licensing committee. Fischer gave the bank until Tuesday to hold a hearing.
Bank Hapoalim notified the Tel Aviv Stock Exchange (TASE) yesterday that it had applied to the Bank of Israel for an extension, and detailed the steps taken to sell Bank Otsar Hahayal.
The government instructed Bank Hapoalim to sell Bank Otsar Hahayal in May 1993. This decision was validated by the Bachar capital market reform. A few weeks ago, Fischer said that if Bank Hapoalim immediately undertook practical step to sell Bank Otsar Hahayal, he would give it a three-month extension to complete the sale.
Three banks have already said they want to buy Bank Otsar Hahayal: Union Bank of Israel (TASE: UNON), First International Bank of Israel (TASE: FTIN1 ;FTIN5), and Mizrahi Tefahot Bank (TASE:MZTF).
Meanwhile, Bank Hapoalim yesterday took steps to block Hever from exercising its first refusal rights for Bank Otsar Hahayal. A few weeks ago, “Globes” revealed that the IDF has first refusal rights for Bank Otsar Hahayal through Hever, giving the IDF the chance to disqualify any buyer proposed by Bank Hapoalim.
Published by Globes [online], Israel business news - www.globes.co.il - on January 2, 2006