For the first time in Israeli banking history, on June 2, 2010, there will be a real race for directorships of a bank. 24 candidates are vying for five spots on the board of Bank Leumi (TASE: LUMI).
19 shareholders submitted independent candidacies, under Article 87 of Bank Leumi's bylaws. Five additional candidates were submitted by the appointments committee for government nominees chaired by Adv. Margalit Nof.
Bank Leumi's board will convene tonight to approve the agenda of the general shareholders' meeting, and it is due to disclose the names of all the candidates for directorships.
Nof, who represents the government, has voting rights for 14.2% of Bank Leumi shares (11.46% held by State of Israel Properties and 2.74% of vested shares held by bank employees). Bank Leumi's largest private shareholder, Shlomo Eliahu, owns 9.59% of the bank. However, the real influence is held by institutional investors, which own an aggregate 37% of the bank, several times the government's holding. Although shareholders are banned from coordinating positions about a candidate for a director, a candidate who wins the institutional investors' support will win easy election.
A check by "Globes" found that nine institutional investors have substantial influence on the vote. Delek Group Ltd. (TASE: DLEKG) and IDB Holding Corp. Ltd. (TASE:IDBH) each own 5% of Bank Leumi, just below the threshold requiring a control permit from the Bank of Israel. The two companies hold the shares through provident funds, participating insurance policies, mutual funds, and exchange traded funds owns by IDB subsidiary Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and Delek Group subsidiaries Israel Phoenix Assurance Ltd. (TASE: PHOE1;PHOE5) and Excellence Investments Ltd. (TASE: EXCE).
Alfred Akirov owns 4.85% of Bank Leumi both privately and through Alrov (Israel) Ltd. (TASE: ALRO), which he controls. David Azrieli owns 4.83%, which he acquired from Cerberus Capital Management LP.
Jewish Colonial Trust Ltd. (TASE:OHH) owns 4.82% of Bank Leumi. Jewish Colonial Trust is controlled by the World Zionist Organization, which decides how it votes.
Other institutional investors in Bank Leumi through Amitim (the eight nationalized old pension funds) are Migdal Insurance and Financial Holdings Ltd. (TASE: MGDL) with a 4.76% stake, Psagot Investment House Ltd. with 4.7%, Menorah Mivtachim Holdings Ltd. (TASE: MORA) with 2.1%, and DS Apex Holdings Ltd. (TASE:DSAP) with 1.3%.
It is believed that some of the five candidates nominated by Nof will not get the votes needed to be elected to Bank Leumi's board. The least likely candidates to get elected are Yehuda Drori, a former capital markets supervisor in the 1980s, and Moshe Dovrat, a serving director and former director of the Investment Promotion Center at the Ministry of Industry, Trade and Labor.
Published by Globes [online], Israel business news - www.globes-online.com - on April 25, 2010
© Copyright of Globes Publisher Itonut (1983) Ltd. 2010