After shaking up the management of Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) last week, CEO Izzy Cohen is continuing his efforts to create value at the company. Sources inform ''Globes'' that the company has put the TASE membership of its investment house subsidiary, Clal Finance Ltd., up for sale, in consultation with Clal Finance CEO Yoram Naveh.
Clal Finance said in response, "It is no secret that TASE membership is a loss-making business when trading turnover is very low. We need to review the future of this activity. The combination of tough competition and burdensome regulation, especially the TASE's capital requirement, weighs on activity on the sector. Nonetheless, we know that during periods of market recovery, TASE membership can generate good profits."
Clal Finance's TASE membership activity includes providing services for securities trading and market making. Harel Finances Ltd. recently sold its TASE membership to A Online Capital Ltd. (TASE: AOC) for NIS 84 million. It seems that the tough competition and falling profits are pushing Clal Finance in the same direction. Clal Finance posted a loss of NIS 7.5 million on its financial services operations (including the TASE membership and brokerage activity) in January-September 2012.
Possible buyers of Clal Finance's TASE membership include Altshuler Shaham Ltd., which previously failed to be accepted as a TASE member due to flaws discovered at the investment house, and Leader Capital Markets Ltd., which was once interested in acquiring the TASE membership of Prisma Capital Markets, before deciding that it was not worthwhile. Foreign banks might also be interested, as well as major nostro players.
It cannot be ruled out that the sale of the TASE membership may be the first step in the sale of Clal Finance, bit by bit. Cohen's predecessor, Shy Talmon, wanted to sell the loss-making investment house, but never reached a deal.
Clal Finance is one of Israel's less efficient investment houses, and requires frequent capital injections from its parent company, due to previous bad investments. Six weeks ago, Clal Investments announced that it would inject a further NIS 50 million into Clal Finance during 2013, in order to meet its debt payments. Since 2010, Clal Insurance has injected NIS 290 million into Clal Finance.
Published by Globes [online], Israel business news - www.globes-online.com - on December 13, 2012
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