Arison to sell Hapoalim controlling stake on TASE

Shari Arison  photo: Yossi Zeliger
Shari Arison photo: Yossi Zeliger

The Bank of Israel has given Shari Arison permission to leave Bank Hapoalim without a controlling core.

Just weeks after completion of the sale of Shikun & Binui Holdings Ltd. (TASE: SKBN), Shari Arison is parting from her other main holding in Israel, namely control of Bank Hapoalim (TASE: POLI). Arison intends to sell the controlling stake in the bank via the Tel Aviv Stock Exchange, and today she received permission to do so from the Bank of Israel. Hapoalim will thus join Bank Leumi (TASE: LUMI) and Israel Discount Bank (TASE: DSCT), which also have no core holding.

Under the new permit, Arison will be considered the controlling shareholder in Bank Hapoalim until the end of this year, after which her control permit will become a holding permit. The directors of the bank on behalf of Arison Investments will resign from the board immediately. This includes Arison Investments CEO Efrat Peled, who is considered the most influential director on Bank Hapoalim's board. The other directors who will resign are Ido Stern and Meir Wietchner.

Arison Investments will have a year to start selling its shares in Bank Hapoalim (20%), and four years from the start date to complete the process. The current value of Arison Investments' stake is some NIS 7 billion. The long period of time that has been allowed for the sale is in order to reduce pressure on the bank's share price.

The decision to sell the controlling stake on the open market comes after several years during which Arison Investments tried to find investors who would buy all the stake or part of it. A year ago, the group was in advanced talks with a consortium of US investors, but the negotiations broke down.

Arison Investments stresses that there is no connection between receipt of the Bank of Israel's permission to sell its stake in Bank Hapoalim and the ongoing investigation of suspected corrupt payments by the Shikun & Binui group, in which Arison and Peled have been questioned by Israel Police.

Shari Arison said today, "In the past few years I have tried to bring in a strategic partner and to reduce my holding in Bank Hapoalim. Since no investor was found for an investment of this size, and after talks with the North American investors ended, a few months ago I approached the Bank of Israel with a request that it should examine the possibility of a permit to sell the holding on the open market. I have had the privilege of being the controlling shareholder in Bank Hapoalim for the past 21 years. I believe in Bank Hapoalim and wish to thank the board of directors, the management, the workers past and present, and the bank's loyal customers. I am sure that Bank Hapoalim, one of the pillars of the Israeli economy, will continue to operate with a vision of financial freedom, to grow, and serve all its customers faithfully."

The Bank of Israel said in a statement today: "Given the size of the holding in relation to the local stock market, a time period of up to five years (with an option for an extension of a further two years) has been stipulated for the controlling shareholder to sell her shares until she reaches a holding of not more than 5% of the bank's share capital. In order to avoid any fear of conflicts of interests, the terms of the directors of the bank who are associated with the Arison group will be terminated immediately. The chairman of the board will continue in his post even after the change in ownership, in accordance with the decision of the Supervisor of Banks, since beyond the fact that he was appointed by the Arison family he is not an officer in the group that the family owns or associated with it in any other way. In addition, the schedule stipulates that from the time the holding permit comes into force, Mrs. Arison's voting rights in the general shareholders' meeting wil not exceed 5%.

"After the holding permit comes into force, Bank Hapoalim will become a bank without a controlling core, whose shares are entirely held by the general public, directly or via financial institutions that manage the public's investments and long-term savings, like Bank Leumi, Discount Bank, and recently Dexia Bank as well. Directors will therefore be elected by the shareholders' meeting in accordance with the normal mechanism for banks without a controlling core, whereby the committee for the appointment of directors (headed by former judge Moshe Gal) recommends candidates for directorships to the general meeting. It should be stressed that the Bank of Israel does not necessarily have a preference for a particular ownership model - a controlling core or decentralized ownership - and adapts the emphases in regulation to the ownership model that emerges at each bank."

In a letter to the bank's employees today, Bank Hapoalim CEO Arik Pinto wrote, among other things, "The upshot is that within the next few years the bank will become publicly owned, without a controlling core. As far as the day to day management of the bank is concerned, there is no change in the way it is run. We shall continue functioning as usual, with the current management team. The announcement ends a close and fruitful partnership between Arison Investments and the bank, during which the bank prospered and maintained its status as Israel's leading financial institution."

Published by Globes [online], Israel business news - www.globes-online.com - on September 4, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Shari Arison  photo: Yossi Zeliger
Shari Arison photo: Yossi Zeliger
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