Is the government's holding in Bank Leumi (TASE:LUMI) about to end? Will the government ministers (who love to be important and sought-after) and senior officials (who are always on the lookout for a senior job in banking) end the saga, which started with the collapse of the banks in 1983? After Minister of Finance Yuval Steinitz dared to decide what his predecessors feared to touch, will there finally be stability in the control of Leumi?
Does the fact that the Supervisor of Banks, Roni Hizkiyahu supported by Bank of Israel Governor Stanley Fischer told Ministry of Finance Director General Yarom Ariav last week (in somewhat hesitant terms) that if, and on condition, and perhaps, and of course only after you have helped us to close through legislation all the corners and cracks that we do not see in the Marani Law, then "we will not oppose the sale of the state's shares on the stock exchange," mean that the Bank of Israel will lead a swift and effective process to permit control over Bank Leumi?
Is the matter decided at all? Will they really soon sell off part of Leumi? When will the controlling core be formed? How long will it take to get a license? What will happen in the mean while? And one more question, which has quietly popped up in recent days: perhaps it's just spin, a sophisticated, multi-layered exercise that will bring Leumi swiftly and within a few months to a situation where it is controlled by its managers and is clean of owners with Galia Maor serving as chairperson.
Will Shlomo Eliahu, who already holds 9.6% of Leumi's shares, realize his plan to control Leumi? In an interview with him that was published on the eve of Rosh Hashana he said, "I expect that the state will sell its remaining shares. I, as the largest shareholder, will arrange and submit within 60 days a strong, better controlling structure that will be approved by the Bank of Israel."
He added, "There is more than just talk." When asked how Leumi will look after he gained control, he said, "More competitive, more socially orientated, and more for the ordinary person without harming business."
If Eilahu does realize his plans, he will formulate and submit a controlling stake to the Bank of Israel for approval.
What will happen then? One possibility is that the Bank of Israel will launch a major personal probe into the new potential controlling cores. That is to say that each candidate, and there could be between five to ten, will need to be fully probed. Under investigation will be personal details, heirs, connections, companies, subsidiaries, all accounts, business and personal conduct, businesses and connections etc. And of course personal equity clear of liens amounting to double the part of the bank owned.
How long will this take? For the Bronfman Group that acquired Israel Discount Bank (TASE:DSCT) it took 18 months after the deal was closed, even though the Bank of Israel had all the relevant papers and commitments for a year before the transaction was finalized. So the entire matter took two and a half years.
Another scenario is that the forces of darkness will prevail at the Bank of Israel. All sorts of people with blind prejudices will say, and whisper, and denigrate and simply stick their nose in against Eliahu or whoever is in his controlling core. Then any response to his permit to run the bank could take years and years.
Meanwhile, the bank will be controlled by its managers. Its true that the government has never much interfered in the running of the Bank, but there was always the fear that it might intervene. From time to time the shareholders' voices were heard too.
But after the state sells its share and will leave the bank, and before the Bank of Israel hands over permission to the new controlling shareholders, the bank will be managed by two women: Galia Maor as chairperson and Rakefet Russak-Aminoach as CEO. They will be the bank and the bank will be these two women.
Despite there being a long list of people being touted as a replacement for outgoing chairman Eitan Raff, it will be Maor, the current CEO, who is appointed to succeed Raff when he retires next May at the shareholders meeting. The official reason will be that the bank must maintain stability while the controlling core is being formed.
Is it possible that the Israel Securities Authority will impose its powers on the parties at interest such as major lenders to Leumi, or institutional bodies that are in dialogue with the bank, to prevent this situation?
New directors will be appointed according to the Marani Law. That will certainly be an unrecognized situation, by law, by regulation and event the Securities Law.
Published by Globes [online], Israel business news - www.globes-online.com - on September 22, 2009
© Copyright of Globes Publisher Itonut (1983) Ltd. 2009