Israel Discount Bank's (TASE: DSCT) work plan for 2010 includes expansion of its US business through an acquisition. The idea is for Israel Discount Bank of New York to acquire a small local bank for up to $100 million
Discount Bank is interested a well-run bank whose management will not need much supervision, and which has up to $1 billion in deposits and a capital multiple of 1-1.5. Discount Bank has not yet begun the search.
In the regulatory climate in the aftermath of the financial crisis, the US banking authorities are trying to reduce the number of banks. Some banks have been closed due to financial problems, and others are being urged to merge with larger banks. The US regulators have toughened capital requirements and oversight demands, which many small banks cannot meet.
Discount Bank believes that Discount Bank New York, as the eighth largest bank in the state, has an opportunity to buy a small bank. Discount Bank New York's shareholders' equity exceeds $600 million, and it has $6 billion in deposits. Acquisition of a bank with up to $1 billion in deposits would boost Discount Bank New York's assets by 10-15%, enabling it to achieve rapid growth at low cost.
Published by Globes [online], Israel business news - www.globes-online.com - on August 4, 2009
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