After the deal whereby Isracard (TASE: ISCD) was to have acquired digital bank Esh for NIS 500 million ran aground, some on the market attribute the failure to the bank not being technologically and commercially mature enough, while others believe that "had Nir Zuk been in Israel, the deal would have been closed."
Four months after it was launched with great fanfare and a promise to change the face of competition in the banking system, the Isracard-Esh deal ended yesterday with a whimper. The credit card company announced that it had decided to withdraw from the acquisition of the bank at a valuation of NIS 500 million after the negotiations between the sides failed to mature into a deal.
Isracard’s laconic notice to the Tel Aviv Stock Exchange stated that the MOU between the sides had expired and had not been extended. Market sources say that the real reason for the failure lay hidden in Isracard’s announcement. The credit card company, headed by Itamar Furman, chose to state that the MOU it had signed included a due diligence examination, raising the possibility that Isracard was not satisfied with some of the information and forecasts presented to them by Esh over the past few months.
"It fell apart because of trivialities"
Isracard sought a shortcut into the banking business by acquiring Esh Bank. The decision not to extend the MOU relates to the timetable presented by Esh’s management, which apparently did not meet Isracard’s demands.
There are those on the market who attribute the gap between the companies to Esh’s inability to show the progress with its technology that Isracard wanted. It is believed that Esh’s technology was sufficiently ready to meet the timetable that Isracard stipulated, but was not initially capable of supporting the volumes that Isracard expected. Isracard boasts of having access to over four million customers.
On the other hand, some on the market say that the negotiations between the sides were actually very close to a successful conclusion and that the breakdown had nothing to do with questions of technology or Esh’s readiness. They say that up until last Friday it looked as though the acquisition deal was about to be closed, and Esh Bank, founded by technology entrepreneur Nir Zuk, was on the way to being sold to Isracard to enable it to set up Isracard Bank in due course, but the talks ran aground. "They fell apart over trivialities," a source close to the negotiations said.
"Had Nir Zuk been in Israel, I think that the deal would have been closed," a source familiar with the details of the negotiations said. "Zuk has succeeded in closing many merger and acquisition deals in the past; that was one of the growth engines of Palo Alto." (Palo Alto Networks, the cybersecurity giant of which Zuk was a founder). But Zuk was not in Israel, the negotiations became over-complicated, and perhaps one of the sides wanted to "improve the terms" too much, and the breakdown came.
Where are the companies headed?
Whatever the cause, the collapse of the deal won’t alter the original plans of the two sides. As far as is known, Isracard’s strategic plan of becoming a lean bank within a short time is unchanged. In an interview with "Globes" last year, Idan Wallace, CEO of Delek Group, which controls Isracard, declared that buying into Isracard could turn the credit company into "the leading company in the finance sector; Isracard can and should enter new fields."
It is therefore thought that Isracard will reexamine the market with a view to offering banking services as quickly as possible. It may initially make use of the business account platform that it launched last year, designed to provide banking services to small businesses. Later on it could examine the possibility of joining up with other players, or alternatively of importing technologies from foreign companies to set up the bank under its own steam. Market sources point out, moreover, that the wording of the notification of the end of the negotiations does not rule out future collaboration with Esh Bank, even if at present that looks unlikely.
The big question mark is over Esh, which will apparently focus in the immediate future on continuing to develop its technology independently. After the breakdown of the negotiations, the digital bank broadcast "business as usual" and reiterated its vision of bringing about change in the traditional banking system. "The Esh group believes in the vision that it propounded of fair banking that changes the laws of nature in the banking industry, and it will continue to strive to achieve the goal for the sake of which it was founded," Esh Bank said in its announcement.
Published by Globes, Israel business news - en.globes.co.il - on July 20, 2026.
© Copyright of Globes Publisher Itonut (1983) Ltd., 2026.