Sources inform ''Globes'' that the agreement for the sale of Israel Discount Bank's (TASE: DSCT) stake in First International Bank of Israel (TASE: FTIN1;FTIN5) will be signed today. The negotiations between the two banks are on the verge of completion. Discount Bank chairman Yossi Bachar and First International Bank chairman Jack Elaad are heading the negotiating teams.
The structure of the deal is the same as reported by "Globes" in January, and which the banks presented to Supervisor of Banks Rony Hizkiyahu.
When the deal is signed and approved by the banks' boards of directors, Discount Bank will publish the milestones for the sale of its 26.45% holding in First International Bank. There will be two milestones: when Discount Bank's holding will fall below 20% and when it will fall below 11%. Until this point, Discount Bank will continue to be able to be represented by two directors on First International Bank's board, as now.
At the same time, First International Bank will distribute a NIS 800 million dividend. A still open point is whether the dividend will be paid in one tranche or two. Hizkiyahu will grant extraordinary permission for the dividend.
Afterwards, First International Bank will consolidate its two shares, which will enable the bank to join the Tel Aviv 25 Index, probably in June. This will help boost the bank's value and will enable Discount Bank to report larger capital gains on the sale of shares at higher prices.
Discount Bank's share price fell 1.4% today to NIS 8.299, but First International Bank share price rose 0.6% to NIS 68.83.
Published by Globes [online], Israel business news - www.globes-online.com - on March 18, 2010
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