The recommendations of the Commission for Examining Centralism in
the Capital Market are well balanced and capable of rapid effectuation,
and need not delay the sale of Bank Hapoalim", said today (Sunday) David
Brodet, Chairman of the Centralism Commission and Director General of
the Treasury.
Brodet stated that the commission had not directly examined the
effect of the recommendations on the value of Bank Hapoalim, but
stressed that it was not clear whether implementation of the
recommendations would result in an increase or a decrease of the
consideration from the sale of Bank Hapoalim. In any case, in his
opinion, even if the possibility exists that putting the recommendations
into practice will operate to reduce the value of Bank Hapoalim, yet
the benefit therefrom to the Israeli economy outweighs any damage
resulting from the decrease in value of the bank.
Dr. Avi Ben-Bassat, senior management member of the Bank of Israel,
who represented the Bank of Israel on the commission, estimated that
implementation of the recommendations would, on the contrary, result
in an increase of the selling price of Bank Hapoalim. Said Ben-Bassat:
"It is possible that if we sell Koor or Clal separately from Bank
Hapoalim, the aggregate consideration will be greater rather than
smaller".
Brodet and Ben-Basset estimated that in being put into effect, the
commission's recommendations need not dramatically influence the capital
market. Brodet said the commission had not, in making its
recommendations, related directly to a possible effect on the capital
market, but had ascribed the greatest importance to further reducing
the banks' non-bank holdings while also diluting the centralism of the
Israeli economy, all without adversely affecting the sale of Bank
Hapoalim, and while providing a suitable response to issues of
stability, conflicts of interest and control in non-bank
corporations.
Ben-Bassat added that "When the shares held by Bank Hapoalim are
sold, the present owners will obviously inject a supply into the capital
market. But it should be borne in mind that this supply will be injected
gradually, over a great number of years and during a period of
continued rapid growth of the Israeli economy, and accordingly,
application of the recommendations will have no great or dramatic effect
on the capital market".
Brodet expressed the hope that the commission's report would be
adopted in its entirety. "The government is not obliged to accept the
commission's recommendations, but will have to furnish a very weighty
reason for not accepting them".
Brodet stressed that the banks will have a choice of four
alternatives for disposing of their non- bank holdings: sale to
private investors in Israel and abroad, and sale through the Israeli
and foreign capital markets. It was also stated that if the
commission's recommendations cause potential purchasers to withdraw,
then the Treasury will consider the possibility of privatising the
banks in the frame of the options plan