Shlomo Eliahu, the largest shareholder in Bank Leumi (TASE: LUMI), with a 9.6% stake, plans to create a controlling core in the weeks following the government sale of its holding in the bank.
Eliahu will reportedly try to recruit five institutional investors to share in the venture, including foreign reinsurance companies. Each investor would own 2% of Bank Leumi, which would create a controlling core owning 20% of the bank, in which Eliahu would be the dominant figure. He owns the holding through Shlomo Eliahu Holdings Ltd.
Eliahu will submit the controlling core to the Bank of Israel for approval. He will also have to reach a settlement over his stake in Union Bank of Israel (TASE: UNON) and Eliahu Insurance Company Ltd. Eliahu's associates believe that these problems can be solved and will not prevent him from obtaining a control permit.
Eliahu intends to become a director at Bank Leumi, and appoint his two sons, Israel and Ofer, as directors as well. Ofer Eliahu is CEO of Eliahu Insurance.
Besides MI Holdings (State of Israel Properties), Shlomo Eliahu is the only shareholder to own more than 5% of Bank Leumi. No other shareholder is a party at interest, including Nochi Dankner through IDB Holding Corp. Ltd. (TASE:IDBH), Yitzhak Tshuva through Delek Group Ltd. (TASE: DLEKG) and its subsidiaries Israel Phoenix Assurance Ltd. (TASE: PHOE1;PHOE5) and Excellence Investments Ltd. (TASE: EXCE), Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL), Alfred Akirov, Jewish Colonial Trust Ltd. (TASE:OHH), and Azrieli Group. IDB, Delek Group, and Migdal cannot participate in the controlling core because the regulator bans cross holdings in banks and insurance companies.
Nonetheless, Supervisor of Banks Rony Hizkiyahu, as a lesson from his clash with Bank Hapoalim (TASE: POLI) controlling shareholder Shari Arison, will not allow a single party to dominate the controlling core of a bank, and he will take care to ensure parity between the members of any controlling core at Bank Leumi. He will therefore likely object to a controlling core dominated by Shlomo Eliahu with five small partners.
Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2009
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