The Bank Hapoalim Board of Directors yesterday (Sunday) decided to establish a business promotion bank to be called "Poalim Capital Markets - Investment Bank Ltd." This bank will be the parent company of the Poalim Capital Markets company, Bank Hapoalim’s existing investment company. Bank Hapoalim thereby caught up with Bank Leumi, to which Leumi & Co. serves as an investment bank.
The transformation of the Poalim Capital Markets company from an investment company into an investment bank derived from the new amendments to the Banking Law, which imposed limitations on bank investments in non-banking businesses. Due to these restrictions, and pursuant to a Bank of Israel permit, the banks were constrained to reduce their investment in non-banking companies, or transfer part of that activity to investment (business promotion) banks.
As a result, the investment banks have recently gained new impetus. Leumi & Co., which is, as stated, the leading bank of its kind, has for some time been functioning as an investment bank, and Bank Hapoalim too has now broached that domain.
Poalim Capital Markets general manager Dan Yahas explained today that, through the new investment bank, Bank Hapoalim now has the option of making non-banking investments. The new bank will have NIS 100 million shareholder’s equity. As an investment bank, it may invest its equity in young companies up to five years of age, and in term investments of up to six years.
An investment profile of this sort is consist with the function of an investment bank as one that fosters young companies on the road to issuance, or gets others to invest in them. Investments in longer established companies or in companies with a very large scope of investment, cannot be made through the investment bank.