Israel Discount Bank (TASE: DSCT) and First International Bank of Israel (TASE: FTIN1;FTIN5) signed an agreement on Thursday evening for Discount Bank to sell its stake in First International. The deal structure was the same as the structure proposed to Supervisor of Banks Rony Hizkiyahu, which "Globes" disclosed in January.
Under the deal, Discount Bank will make a NIS 120 million tax provision its financial report for the fourth quarter of 2009, which it will publish on Thursday, which will reduce the bank's net profit. The bank previously made a NIS 130 million provision, but took it back in the second quarter of 2009.
A condition of the deal is the distribution of an NIS 800 million dividend by First International Bank, of which Discount Bank's share amounts to NIS 211 million. Afterwards, First International Bank will consolidate its two share series, which will enable it to join the Tel Aviv 25 Index.
Discount Bank currently owns 26.45% of First International Bank. The shares are worth NIS 1.8 billion, and Discount Bank books them at a value of NIS 1.6 billion. The sale of the shares will increase Discount Bank's capital adequacy ratio by 1.2 percentage points and its Tier-1 capital adequacy ratio by 0.7 percentage points.
Discount Bank will sell 6% of First International Bank in the first stage.
Published by Globes [online], Israel business news - www.globes-online.com - on March 21, 2010
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