Franco-Belgian banking group Dexia will sell its 65.34% stake inDexia Israel (Public Finance) Ltd. (TASE:DXIL) by the end of the summer - "even at a loss." This emerges from press reports in Belgium and Holland on the annual shareholders meeting held by Dexia in Brussels at the end of last week. The group is believed to be in negotiations with an Israeli financial institution.
At the shareholders meeting, Dexia managers were attacked by pro- Palestinian speakers, who argued against Dexia Bank's activity in Israel, which they said includes construction in "Jewish settlements in the West Bank," and reportedly accused Dexia of being a "partner in war crimes." Dexia chairman Jean-Luc Dehaene, a former Belgian prime minister, defended himself and argued in response that "the decision to grant credit for construction in the settlements is from 2001, and the current management has no connection to it." "Contribution to the Palestinian Authority"
Dehaene said that Dexia Israel would be sold this summer. To shareholders who demanded that the profit from the sale of the Israeli branch should be donated to the Palestinian Authority, Dehaene said that "I do not expect to make a profit on the sale. After we received the signal of the shareholders, we decided to sell even if we lose money."
According to Dehaene, credit provided by Dexia to the West Bank settlements amounts to only 5 million euros, representing 1% of the credit, and that from September 2008 (when the governments of Belgium and France nationalized Dexia, which was on the verge of bankruptcy - E.P.) no additional investments were made. Pro-Palestinian activists claim that Dehaene did not include credit to the Jerusalem Municipality in this figure. Dehaene said on this that Dexia did not consider Jerusalem to be part of the West Bank.
Dexia Group holds 65% of Dexia Israel, and a few weeks ago "gave a mandate" to French investment bank Rothschild to examine proposals for the sale of the bank. Today (Sunday), Dexia Israel reported that "After reviewing proposals from several interested parties, Dexia entered into negotiations with the party that offers the best outlook for Dexia Israel in terms of its activity and financially ". Mizrahi Tefahot, considered one of the candidates for an acquisition, said today that "it is not negotiating with Dexia."
The CEO of Dexia Bank of Israel is David Kapah. Dexia specializes in municipal credit, which accounts for 88% of the credit extended by the bank. It has a market share of 38%, and leads the field of credit to local authorities. Dexia is traded at a market cap of NIS 480 million. Its shareholders' equity is NIS 587 million. Profit in 2010 was NIS 58 million, and the return on equity was 9.8%.Because of the concentration of its credit, the bank is forced to maintain a high capital adequacy ratio of 21.5% compared with a 13.5% minimum stipulated by the Bank of Israel.